As mortgage rates pushed higher, monthly refinance share continued to deflate. Compared to a year ago, conventional share grew at the expense of government share.
Two-thirds of single-family loans closed during April were conventional mortgages. The share of conventional transactions has widened from 63 percent in the same month last year.
At the same time, the share of originations that were mortgages insured by the Federal Housing Administration has thinned to a fifth from 23 percent in April 2017.
Also thinning has been the proportion of mortgages guaranteed by the Department of Veterans Affairs, which decreased to 9 percent from a 10th in the report a year ago.
Ellie Mae Inc. revealed the metrics in its April 2018 Origination Insight Report.
Out of all applications that were started in the previous 90-day cycle,
69.5 percent had closed by last month. The closing rate was slightly diminished versus 69.6 percent in March but slightly stronger than 69.4 percent in April 2017.
Refinances had a 64.8 percent closing rate, while the ratio was 73.9 percent on purchases. Conventional closing rates were 69.7 percent, FHA rates were 67.7 percent, and VA loans had a 65.6 percent rate.
The average mortgage took 41 days to close last month. That was the same as in the last report and a day faster than a year previous. Refinance turn times were 37 days, and purchases were 42 days. Conventional time to close was 40 days, FHA turnaround was 42 days and VA time lines were 45 days.
Borrowers’ FICO scores averaged 723 in April 2018, tightening a point from a month earlier and a year earlier. Credit scores were 726 on conventional refinances and 752 on conventional purchases. Scores averaged 650 on FHA refinances and 676 on FHA purchases. VA refinance scores averaged 694, and VA purchases averaged 707.
At 79 percent, average loan-to-value ratios were the same as in March but more restrictive than 80 percent in April of last year. Conventional transactions had 64 percent LTV ratios on refinances and 81 percent on purchase financing, while FHA ratios were 77 percent on refinances and 95 percent on purchases. VA LTV ratios were 89 percent on refinances and 98 percent on purchase production.
Debt-to-income ratios were 26/39 each of the past two months and a little less restrictive than 25/39 percent the year-prior period. Conventional DTI ratios averaged 26/40 percent on refinances and 24/36 percent on purchase-money loans. FHA transactions had DTI ratios of 30/47 percent on refinances and 29/44 percent on purchase transactions. The average was 27/42 on VA refinances and 26/42 on VA purchases.
Refinance share was sliced to 34 percent from 38 percent in March and 35 percent in April 2017. Refinance share was 38 percent on conventional loans, 22 percent on FHA closings and 27 percent for VA transactions.
“This month we saw interest rates increase to the highest percentage point since Ellie Mae began reporting data in 2011, and with that, the percentage of purchases increased four percentage points to 66 percent of total closed loans,” Ellie Mae President and Chief Executive Officer Jonathan Corr said in an accompanying report. “We’re entering the peak summer homebuying months and despite tight inventories, we expect to see a robust purchase market.”
