Credit Scores on Closed Loans Fell to Lowest Level Since Ellie Mae Began Reporting Data, According to Latest Origination Insight Report
Refinances represented 42 percent of overall loan volume in September, a one-month increase of 5 percent
PLEASANTON, Calif. – October 21, 2015 – Credit scores on closed loans fell to their lowest level since Ellie Mae began reporting data in August 2011, 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. The average FICO score on all closed loans fell to 723. Credit availability on refinances appears to have increased in Q3 of 2015 as the overall average FICO and DTI have loosened materially from Q2 of 2015.
Ellie Mae’s data also showed that refinances represented 42 percent of overall loan volume in September, a 5 percent increase from August. This was likely driven by the recent dip in interest rates. Additionally, closing rates remained robust with over 66 percent of all loan applications closing for the third consecutive month. The closing rate on purchase loans increased to 71 percent.
“Average credit scores declined to the lowest levels we’ve seen since 2011,” said Jonathan Corr, president and CEO of Ellie Mae. “We are also seeing rates fall while the time to close is also decreasing. It will be interesting to see if these trends continue as we begin to see impacts from TRID.”
The Origination Insight Report mines its application data from a robust sampling of approximately 66 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.
Other findings from the September report:
- The average 30-year rate for all loans declined for the first time since May, falling to 4.280.
- The time to close on all loans declined for the fourth consecutive month to 46 days.
MONTHLY ORIGINATION OVERVIEW FOR SEPTEMBER 2015