As a growing share of refinance applications are failing to close, purchase applications are closing at the highest rate in four months. But the improved productivity on purchase financing is taking a toll on turnaround.
Out of all the loan applications started three months earlier, 53.5 percent closed in May.
The closing rate edged down from the prior month’s ratio of 53.2 percent.
An improvement has also been made compared to May 2012, when the closing rate was just 47.2 percent.
The numbers were reported by Ellie Mae based on a sampling of transactions that run through its systems. The Pleasanton, Calif.-based firm says that it handles one-in-five U.S. new home loan transactions.
Refinances had a closing rate of 49.1 percent in the most recent month, falling each of the past three months.
But purchase applications had a 60.7 percent ratio during April, the highest since January.
Production personnel took 44 days to close a loan, speeding up from 46 days in April and two days faster than a year earlier.
Refinance closing times were 44 days in May, dropping from the previous month’s 47 days.
However, purchase financing took 45 days to close, one day longer than the prior month.
Not much change was noted in the risk characteristics of recent production.
The average FICO score on closed loans crept up to 743 from 742 in April but drifted down from 744 the same month last year.
On denied business, the average FICO was 701, the same as a month earlier and one point lower than a year earlier.
At 79 percent, the average loan-to-value ratio on funded business was lower than 81 percent in the last report and in the year-earlier report.
Average LTV ratios on turned-down applications was 84 percent, off from the previous month’s 85 percent and 88 percent in the same month during the previous year.
“For the past few months, we’ve noted a gradual decline in high-LTV refinances that are most likely HARP-related,” Ellie Mae President and Chief Operating Officer Jonathan Corr said in a statement. “In May, for the first time this year, HARP-related refinancing activity fell below 10 percent to 9.4 percent.”
The debt-to-income ratio on funded originations averaged 23/35 in the latest report, unchanged since February. The average DTI ratio was 24/35 in May 2012.
But on denied business, the average DTIÂ ratio dipped to 27/44 from 28/45. A year earlier, the average was 28/43.
Refinances accounted for 58 percent of May activity, the same as a month earlier. In the same month last year, refinances accounted for 54 percent of overall activity.
