continued to dominate mortgage originations in July, but the gap with purchase
loans is closing. Ellie Mae’s Origination Insight Report for the month
showed refinances with a 54 percent share, down from 58 percent in June.
Purchasing increased to 46 percent from 42 percent.
The rate on closed 30-year fixed
rate mortgages declined from an average of 3.40 percent the previous month to
3.24 percent. Those originated as conventional loans had a rate of 3.26 percent,
down from 3.42 percent. The FHA rate averaged 3.26 percent and the VA rate 3.02
percent, down 15 and 18 basis points, respectively.
The distribution of loan types
shifted slightly. The FHA share picked up 1 percentage point to 11 percent and
conventional and VA loans each lost a point, dipping to 79 percent and 6
The time to close all loans held at
47 days for the second month but the time to close refinances increased by two
days to 50 and purchase loans closed in 44 days rather than 46 the prior month.
The average FICO score for all loans
ticked down 1 point in July but that score is 12 points higher than in January.
That magnitude increase is generally reflected across all refinances and VA
purchase loans but scores for conventional and FHA purchase loans have
increased by only about half that amount.
Closing rates increased to 77.1
percent in July, up from 73.4 percent in June. Ellie Mae determines the closing
rate by reviewing a sample of loan applications initiated 90 days earlier, in
this case April 2020 applications.
“Interest rates have continued to
decrease, down to 3.24 percent in July. If we look at this month versus the
same time in 2019, interest rates are down close to a full percentage point,
giving new homebuyers the opportunity to stretch their dollar as they purchase
and existing homebuyers the ability to reduce monthly costs,” said Jonathan
Corr, President and CEO of Ellie Mae. “We’re also seeing an increase in closing
rates for Ellie Mae lenders highlighting the value of mortgage technology as
they contend with significant volume, remote workforces and homebuyers looking
to complete the process completely online.”
The Ellie Mae’s Origination
Insight Report mines data from a sample of approximately 80 percent of
all mortgage applications initiated through its mortgage management system. The
company says its report is a strong proxy of the underwriting standards
employed by lenders across the country.