Credit scores on government refinances are climbing, according to a new monthly reading on loan originations. Meanwhile, conventional lenders are becoming more conservative about debt-to-income ratios on refinances.
It took 44 days to close a mortgage during February, though refinances came in a little slower at 48 days.
Refinance share of closed loans was 67 percent in February. The share has grown from 64 percent in November 2011 and 61 percent in August 2011.
The findings were culled from Ellie Mae’s first-ever Origination Insight Report for February. The metrics were derived from a third of applications initiated through the Encompass loan origination platform.
Ellie, a Mortgage Daily advertiser, says its Encompass360 platform handled around 2 million loan applications last year, “or 20 percent of all U.S. mortgage originations.”
The share of production that was insured by the Federal Housing Administration was a quarter, the same as November.
The average FICO score on closed loans has been climbing, with scores rising to 750 during the latest month from 741 in August. This trend was most apparent on FHA refinances, which climbed to 722 during the latest month from 714 in November and 706 in August.
Meanwhile, the average loan-to-value ratio on all closed loans fell to 76 percent from 79 percent in August.
Debt-to-income ratios on funded loans have also been on the decline, coming in at 23 percent on the front end and 34 percent on the back end versus 25 percent and 36 percent six months earlier.
On mortgage applications that were denied, FICOs were 699 in February versus 696 in August, while LTV ratios inched up to 83 percent from 82 percent six months earlier.
Lenders have been tighter on debt-to-income ratios, with denied applicants having front- and back-end ratios of 28 percent and 44 percent compared to 29 percent and 45 percent in August.
The tightening of debt-to-income ratios was even more evident on conventional refinance applications that were denied, with the ratios falling to 27 percent and 43 percent in the most-recent report from 28 percent and 44 percent three months earlier and 30 percent and 45 percent six months prior.
