Ice Mortgage Technology (formerly
Ellie Mae) said that closed loans continued show declining note rates in January,
dropping from an average of 2.93 percent in December to 2.88 percent. The
decline occurred across all loan types. The 30-year rate on conventional loans dropped
to 2.91 percent from 2.96 percent and the 30-year rate on FHA loans declined by
8 basis points to 2.86 percent. The VA rate averaged 2.60 percent compared to 2.66
percent the prior month.
As rates retreated, the percentage
of refinances continued to increase, the ICE Mortgage Origination Report
said, representing 67 percent of closed loans, up from 60 percent in December
2020. The refinance share varied among lenders, from 74 percent for
conventional loans, to 36 percent for VA loans, and 24 percent for FHA. The FHA
refi share was up 5 basis points month-over-month while the refi share for each
of the other two increased 6 basis points.
“Interest rates continued to decline
in January, driving up the share of refinances by seven percent,” said Joe
Tyrrell, president of ICE Mortgage Technology. “We’re continuing to keep an eye
on average FICO scores as many lenders tighten credit during this time of
rising loan volume. We continue to see growth on our Encompass Lending
Platform, indicating that our lenders are utilizing digital mortgage technology
to serve their customers and close these record number of loans as quickly as
The distribution of loans across
lenders shifted slightly from December to January. The conventional share rose
to 84 percent of originations from 81 percent while FHA and VA each lost a 1-point
share, to 9 percent and 5 percent, respectively.
The time to close all loans held
steady at 58 days from December to January as did the timelines for refinancing
(59 days) and purchase loans (57 days.)
The closing rate, which is based on
a sample of loan applications initiated 90 days prior, that is in October 2020,
was 76.2 percent. The rate in December was 76.5 percent.
The ICA Origination Insight
Report uses data from large sampling of approximately 80 percent of
all mortgage applications initiated on its proprietary lending platform. The
company says the Report is a strong proxy of the underwriting standards
employed by lenders across the country.