The dominance of conventional
lending continued to grow in May. Ellie Mae’s Origination Insight Report
says those loans made up 82 percent of originations during the month, up from
81 percent in April and 70 percent at the end of 2019.
The FHA share has shrunk
from 17 percent to 9 percent over that period and VA loans had a 6 percent
share, down from 9 percent.

The company’s reports that the interest rate on all
loans closed in May averaged 3.43 percent, down from 3.48 percent in April. The
conventional 30-year rate averaged 3.44 percent, down 4 basis points, and the FHA
and VA rates dropped 9 basis points and 7 basis points to 3.45 percent and 3.24
percent, respectively. As
rates dropped, the percentage of refinances held steady at 65 percent of closed
loans in May.
The VA share of purchase loans, however, jumped from 69 to 75
percent.

“Interest rates continued to decline
in May, but we are seeing signs of refinances leveling out as the percentage of
closed refinances held at 65 percent for the second month,” said Jonathan Corr,
President and CEO of Ellie Mae. “As we enter the summer months that typically
bring a busier purchase market, we will watch to see if the numbers shift
further as homebuyers continue to take advantage of low rates and a loosening
of inventory
after a tight March and April driven by the shelter in place.”

The time to close all loans
increased to 45 days in May, up from 42 days in April. Refinancing accounted
for most of the extra time. The closing period for those loans grew from 39
days in April to 44 days.

Closing rates declined, a bit, from
76.5 percent in April and 78 percent in March to 76 percent. Ellie Mae bases
its closing rate estimate on a sampling of loan applications initiated 90 days earlier,
in this case the February 2020 applications.

Ellie Mae’s Origination Insight
Report
mines data from a sample of approximately 80 percent of all mortgage
applications that were initiated on its mortgage management system. The company
says its report is a strong proxy of the underwriting standards employed by
lenders across the country.

By Jann Swanson , dated 2020-06-18 11:16:22

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Courtesy of Mortgage News Daily

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