The share of home loan applications that closed strengthened last month, while the amount of time it took to close those loans was reduced.
The closing rate on November originations was 53.1 percent, improving from 51.4 percent a month earlier. The rate, which reflects the share of loan applications started in the prior 90-day cycle that have closed, was also better than the 52.3 days a year earlier.
The closing rate on refinances inched up to 45.4 percent from 44.6 percent in October. The improvement was far better on purchases, to 59.1 percent from 56.9 percent.
Ellie Mae reported the statistics in its Origination Insight Report, which it said reflects a 44 percent sampling of loan applications initiated on the Encompass origination platform. Encompass360 mortgage management software reportedly touched one-in-five U.S. mortgages closed last year.
The average loan took 42 days to close in November, three days less than the previous month. Turnaround has significantly improved from 50 days in November 2012.
Turn times dropped to 42 days on refinances from 45 days in October. But the improvement was not so good on purchase financing transactions, which took 45 days to close versus 46 days in the prior month.
Last month’s average borrower had a FICOÂ score of 729. Lenders lowered their standards from the previous month, when the average score was 732, and the same month last year, when it was 750.
But on denied applications, average credit scores tightened to 694 from 689 a month earlier, though they were lower than 707 a year earlier.
Credit scores on closed Federal Housing Administration-insured refinances increased to 686 from 683 in October, but scores on FHA purchases fell to 690 from 692.
Average FICO scores on denied applications for FHA refinances declined to 655 from 659.
Average loan-to-value ratios on all closed loans have been unchanged for three months at 81 percent. LTVs were higher, however, than 79 percent in November 2012.
But LTV ratios on denied applications moved down to 82 percent from 83 percent in October and 86 percent in November 2012. The drop likely reflects declining Home Affordable Refinance Program activity.
FHA refinance LTVs jumped to 86 percent from October’s 83 percent, while FHA purchase LTVs have been stuck at 95 percent for six months.
Average debt-to-income rates on conventional and government mortgages were unmoved from October at 25/38 percent but higher than 23/34 percent in the same month during 2012.
DTI ratios rose on loans that were turned down, to 28/44 percent from 27/44 percent in both the prior month and the same month during the prior year.
FHA-insured loans accounted for 20 percent of last month’s business. FHA share inched up from 19 percent a month earlier and a year earlier.
The share of originations that were refinances jumped to 45 percent from 39 percent in October. Ellie Mae President and Chief Operating Officer Jonathan Corr speculated in the report that a 25-basis-point decline in interest rates likely fueled the increase.
But refinance share remains well below 68 percent in November 2012.
