A bigger share of mortgage loan applications closed last month, though it took longer to complete the process. Meanwhile, lenders were less restrictive with their loan approvals.
Based on loan applications started in the previous 90-day cycle, the closing rate increased to 54.3 percent from the prior month’s 53.5 percent. A year earlier, just 46.2 percent of loan applications were converting.
The closing rate on refinances inched up to 49.9 percent from May’s 49.1 percent, but the purchase financing closing rate slipped to 60.4 percent from 60.7 percent.
The findings were outlined in Ellie Mae’s Origination Insight Report for June. The report reflects activity on 44 percent of closed loan applications initiated on the Encompass origination platform.
It took 47 days to close a loan in June, slowing from 44 days the prior month. But turnaround hasn’t changed from the same month last year.
Refinance turn times lengthened to 47 days from 44 days in May, and purchase financing took 46 days versus 45 days.
FICOÂ scores averaged 742 in June, easing from 743 a month earlier and falling from 746 a year earlier.
On denied applications, credit scores have been 701 for three consecutive months. No change was recorded from the same month last year.
The average loan-to-value ratio moved up to 80 percent from 79 percent and was the same as in June 2012.
Average LTV ratios on denied loans were unchanged from May at 84 percent but fell from 87 percent in the year-earlier period.
At 23/35, the average debt-to-income ratio hasn’t moved for four consecutive months and was the same as in June of last year.
But on loan applications that were turned down, average DTI ratios climbed to 28/44 from 27/44 and were 27/43 a year prior.
Refinance share dropped to 51 percent from 58 percent in May and 54 percent in June 2012. The share recently peaked at 73 percent in January.
“In June, the mix of refinance-to-purchase loans continued to rebalance as higher rates made refinancing less attractive and the prospect of higher home prices and potentially higher interest rates may have brought more buyers to the closing table,” Ellie Mae President and Chief Operating Officer Jonathan Corr stated in the report.
Loans insured by the Federal Housing Administration accounted for 19 percent of last month’s activity, the same as the previous month. But FHA share has diminished from 23 percent in June 2012.
