As Purchase Market Leads the Way, Time to Close Shrinks According to latest Origination Insight Report from Ellie Mae

FICO scores drift downward in February

PLEASANTON, Calif. – March 15, 2017 – Home loans for purchases increased to 57 percent in February, up from 53 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.

The average time to close all loans decreased to 46 days in February, down from 51 days in January. Similarly, the time to close a refinance dropped to 47 days from 53 days the month prior, and time to close a purchase dropped to 45 days, down from 48 days in January.

As the 30-year note continued to rise in February, average FICO scores dropped with the average FICO score on all closed loans at 720. Conventional refinance FICO scores dropped to 728 in February, down from 732 in January. FHA refinance FICO scores dropped to 649 in February, down from 651 in January. VA refinance FICO scores dropped five points to 702 in February. FICO scores on purchases stayed consistent from the month prior with FHA purchase FICO scores at 686, conventional purchase at 752 and VA purchase at 707.

Closing rates for all loans decreased to 70.6 percent, down from 72.2 percent in January. Refinance closing rates decreased to 65.4 percent, down from 67.9 percent the month prior, and purchase closing rates decreased from 76.8 percent in January to 75.9 percent in February.

“The purchase market led the way in February, representing 57 percent of total closed loans,” said Jonathan Corr, president and CEO of Ellie Mae. “Along with the growing purchase market, we’re seeing the time to close all loans decrease and FICO scores decline, trends that we will continue to watch in the coming months.”

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.

MONTHLY ORIGINATION OVERVIEW FOR FEBRUARY 2017

  February
2017*
January
2017*
6 Months Ago
(Aug. 2016)*
1 Year Ago
(Feb. 2016)*
Closed Loans
Purpose
Refinance 43% 47% 43% 46%
Purchase 57% 53% 56% 52%
Type
FHA 23% 21% 20% 22%
Conventional 63% 66% 68% 65%
VA 10% 9% 9% 9%
Days to Close
All 46 51 46 46
Refinance 47 53 46 44
Purchase 45 48 46 48
Percentage of ARM and Fixed Loan Volume
ARM % 5.3% 5.4% 4.1% 5.1%
30-Year Rate
Average 4.36% 4.31% 3.77% 4.22%

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

PROFILES OF CLOSED AND DENIED LOANS FOR FEBRUARY 2017
  Closed First-Lien Loans (All Types)
FICO Score (FICO) 720
Loan-to-Value (LTV) 79
Debt-to-Income (DTI) 25/40

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 November 2016 applications—to calculate an overall closing rate of 71 percent in February 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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