Average FICO Scores Dropped in January According to Latest Origination Insight Report from Ellie Mae

Purchase and refinance closing rates decreased slightly while 30-year note rate increased

PLEASANTON, Calif. – February 15, 2017 – As the 30-year note continued to rise in January, average FICO scores on refinances dropped across conventional, FHA and VA loans. While average FICO scores decreased from 726 in December to 722 in January, conventional refinance FICO scores dropped to 732 in January, down from 739 in December and 743 in November. FHA refinance FICO scores dropped to 651 in January, down from 654 in December. VA refinance FICO scores dropped two points to 707 in January.

Home loans for purchases dipped slightly in January, decreasing to 53 percent from 54 percent the month prior, according to the latest Origination Insight Report released by Ellie Mae® (NYSE:ELLI), a leading provider of innovative on-demand software solutions and services for the residential mortgage industry. Refinances represented 47 percent of closed loans in the month, up slightly from 46 percent the month prior.

Closing rates for all loans decreased slightly to 72.2 percent, down from the high of 73.2 percent in December. Refinance closing rates decreased to 67.9 percent, down from 69.6 percent the month prior and purchase closing rates decreased from 77 percent in December to 76.8 percent in January.

The average time to close all loans increased to 51 days in January up from 50 days the month prior, alikely carry over from holiday seasonality. Similarly, the time to close a refinance increased to 53 days while time to close a purchase held at 48 days.

“Rates continued to increase in January and with that we began to see an uptick in adjustable rate mortgages, a trend that we will watch throughout the year,” said Jonathan Corr, president and CEO of Ellie Mae. “Additionally, FICO scores began to drop slightly across the board while closing rates remained high as homebuyers locked in rates to close their loans.”

The Origination Insight Report mines its application data from a robust sampling of approximately 75 percent of all mortgage applications that were initiated on the Encompass® all-in-one mortgage management solution. Ellie Mae believes the Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.

Ellie Mae also distributes data from its monthly Ellie Mae Millennial Tracker, which focuses on mortgage applications submitted by millennials during specific time periods. Ellie Mae defines millennials as applicants born between the years 1980 and 1999. The Millennial Tracker will continue to be released on the first Wednesday of each month.

Other findings from the January report:

  • Time to close a VA loan increased to 53 days.
  • The Debt-to-Income (DTI) ratio for all closed loans was 25/39, and the Loan-to-Value (LTV) ratio remained at 78.

MONTHLY ORIGINATION OVERVIEW FOR JANUARY 2017

  January
2017*
December
2016*
6 Months Ago
(Jul. 2016)*
1 Year Ago
(Jan. 2016)*
Closed Loans
Purpose
Refinance 47% 46% 37% 47%
Purchase 53% 54% 62% 52%
Type
FHA 21% 20% 23% 22%
Conventional 66% 66% 65% 65%
VA 9% 9% 9% 10%
Days to Close
All 51 50 46 49
Refinance 53 52 48 48
Purchase 48 48 46 50
Percentage of ARM and Fixed Loan Volume
ARM % 5.4% 4.6% 4.5% 5.3%
30-Year Rate
Average 4.31% 4.05% 3.87% 4.30%

*All references to months should be read as month ended.

PROFILES OF CLOSED AND DENIED LOANS FOR JANUARY 2017
  Closed First-Lien Loans (All Types)
FICO Score (FICO) 722
Loan-to-Value (LTV) 78
Debt-to-Income (DTI) 25/39

More information and analysis of closed and denied loans by loan purpose and investor are available in the full report at http://www.elliemae.com/about-us/news-reports/ellie-mae-reports/.

To get a meaningful view of lender pull-through, Ellie Mae reviewed a sampling of loan applications initiated 90 days prior—or the October 2016 applications—to calculate an overall closing rate of 72 percent in January 2017 (see full report).

About the Ellie Mae Origination Insight Report

The Origination Insight Report focuses on loans that closed in a specific month and compares their characteristics to similar loans that closed three and six months earlier. The closing rate is calculated on a 90-day cycle rather than on a monthly basis because most loan applications typically take one-and-a-half to two months from application to closing. Loans that do not close could still be active applications or applications withdrawn by consumers or denied for incompleteness or non-qualification.

The Origination Insight Report details aggregated anonymized data pulled from Ellie Mae’s Encompass origination platform.

News organizations have the right to reuse this data, provided that Ellie Mae, Inc. is credited as the source.

About Ellie Mae

Ellie Mae (NYSE:ELLI) is a leading provider of innovative on-demand software solutions and services for the residential mortgage industry. Mortgage lenders of all sizes use Ellie Mae’s Encompass® all-in-one mortgage management solution, Mavent Compliance Service, and AllRegs research, reference and education resources to improve compliance, loan quality and efficiency across the entire mortgage lifecycle. Visit EllieMae.com or call 877.355.4362 to learn more.

PRESS CONTACT

Erica Harvill
Ellie Mae, Inc.
(925) 227-5913
Erica.harvill@elliemae.com

Alexandra Gardell Kreuter
Allison+Partners
(646) 428-0618
EllieMae@allisonpr.com

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© 2017 Ellie Mae, Inc. Ellie Mae®, Encompass®, AllRegs®, the Ellie Mae logo and other trademarks or service marks of Ellie Mae, Inc. appearing herein are the property of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other company and product names may be trademarks or copyrights of their respective owners.

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