The refinancing share of originations increased again in
September, rising 2 points to 58 percent of all loans. Ellie Mae’s Origination
Insight Report
for September shows the increase came almost inclusively in
conventional loans where the refi share jumped 5 points to 66 percent. The refinancing
share of VA loans rose 1 point to 20 percent while the FHA share was unchanged
at 15 percent. The reciprocal share, 42 percent, of purchase mortgages is a significant drop from 50 percent in
January, but Ellie Mae notes it is well above the May low of 35 percent of all
closed loans.

The increase in refinancing was undoubtably in
response to a further decline in the 30-year note rate
. The average for all
loans was 3.00 percent, down from 3.09 percent in August. Ellie Mae said this
rate was the lowest since it began tracking the data in 2011. The average for
conventional loans was 3.02 percent; 3.01 percent for FHA loans and 2.78
percent for VA loans.

The distribution of loans across loan types was
essentially unchanged from the prior month. The share of FHA loans dipped 1
point to 10 percent, a point picked up by conventional loans which accounted
for 80 percent of originations. The VA share was unchanged at 6 percent.

The time to close all loans
increased to 51 days in September, up from 49 days in August. The time to close
both purchase and refi loans rose slightly, purchase loans from 45 to 47 days
and refinances from 50 to 54 days.

Closing rates dipped to 77.1 percent
in September, down from 77.2 percent in August. To get a meaningful view of lender
pull-through, Ellie Mae reviewed a sampling of loan applications initiated 90
days prior-or the June 2020 applications.

“We are continuing to see interest
rates decrease to new historic lows, hovering right at three percent for the
month for all loans,” said Joe Tyrrell, president, ICE Mortgage Technology. “As
we move into fall and the traditionally hot summer homebuying season normally
tapers off, we will watch to see if purchase loan applications trend downward
and refinances regain momentum. We know that homeowners are continuing to take
advantage of the low rates, almost an entire percentage point lower than the
same period in 2019, as a means to lower monthly payments and stretch their

Tyrrell continued, “In addition,
we’re seeing FICO scores rise to new 2020 highs, approximately 20 points higher
than the same period in 2019, indicating that lenders are being more selective,
but also that homebuyers and homeowners should understand the various loan products
to find the one that suits their profile best.”

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

By Jann Swanson , dated 2020-10-22 11:13:46

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Courtesy of Mortgage News Daily

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