Lending standards? What lending standards? Purchase loans are soaring as home buyers outmuscle refinancing home owners in the pursuit of mortgage credit.
Purchase loans’ share of market shot up four points in July while refinancings fell back four points in Ellie Mae’s monthly origination overview, the largest leap for purchase loans in the brief history of the Ellie Mae report.
Simultaneously, several important lending standards loosened, making it easier for borrow with marginal credit or more costly houses to qualify for mortgages. The median FICO score to qualify for a mortgage fell to a lower level than it has reached in years.
MONTHLY ORIGINATION OVERVIEW FOR AUGUST 2013
|August 2013*||July 2013*||6 Months Ago
|1 Year Ago
|Days to Close|
|ARMs vs. Fixed, Length, Rate|
|15 Year %||14.6%||15.5%||16.8 %||16.8%|
|30 Year - Note Rate||4.618||4.357||3.723||3.763|
“Purchase loans continued to gain share in August,” said Jonathan Corr, president and chief operating officer of Ellie Mae. “This was the highest percentage of purchase loans since we began tracking this data in August 2011.
“HARP-related high LTV refinances (95% or more) continued their resurgence, moving up from 11.1% in July 2013 to 13.4% in August 2013,” he added.
“In August 2013, the average FICO score for closed loans dropped to 734, the lowest level since we began our tracking in August 2011,” noted Corr. “Meanwhile, loan-to-value and debt-to-income ratios rose slightly again last month-continuing the credit-easing trend.
“The average 30-year note rate jumped to 4.618% in August 2013, up from 4.357% in July 2013 and nearly a whole percentage point from a year ago.”