During the final month of last year, mortgage originators shifted more of their business from government-backed financing to conventional loan transactions.
Conventional loan originations accounted for 65 percent of all loans closed during the month of December, more than the 64 percent share the previous month.
Mortgages insured by the Federal Housing Administration made up another 22 percent of activity, trimmed down from the 23 percent FHA share in November.
Another nine percent of December’s production was residential loans guaranteed by the Department of Veterans Affairs, off from 10 percent the prior month.
Ellie Mae Inc. reported the details in its Origination Insight Report December 2015. The report reflects a sampling of data from loans that utilized the Pleasanton, California-based company’s technology.
Of all loan transactions started during the previous 90-day cycle, 67.3 percent had closed by December.
The closing rate weakened from 68.4 percent one month prior but strengthened from 60.2 percent one year prior.
The latest closing rate was 63.5 percent for refinancing and 71.0 percent for purchase financing.
On conventional mortgages, December 2015’s closing rate was 68.8 percent, while it was just 63.4 percent on FHA-insured loans and 62.4 percent on VA-guaranteed mortgages.
The report indicated that it took 49 days to close a residential loan, the same turnaround as in November but seven days longer than in December 2014.
Refinance turnaround was 47 days in December 2015, while it took 50 days to close a purchase transaction.
On conventional and FHA-insured mortgages, it took 49 days from start to finish last month, while VA turnaround was longer at 52 days.
The average FICO score on home loans closed during December 2015 was 722. That was a point higher than a month earlier but
six points less than a year earlier.
At 727, average credit scores on conventional refinances were lower than the 754 average for conventional purchase financing.
Credit scores averaged 651 on FHA-insured refinances and 688 on FHA-insured purchases.
VA refinance FICO scores averaged 707 during the most-recent month, while VA purchases had an average score of 706.
Loan-to-value ratios averaged 80 percent last month, up from 79 percent in November and the same as in the final month of 2014.
Last month’s average LTV was 69 percent on conventional refinance transactions and 80 percent on conventional purchase financing.
December 2015’s average FHA LTV ratio was 80 percent on refinances and 95 percent on purchase transactions.
Refinances of VA mortgages had an average LTV ratio of 88 percent. The ratio jumped to 98 percent on VA purchases.
At 25/39 percent, average debt-to-income ratios on all loans were no different than in November and higher than 24/38 percent in December 2014.
The latest month’s average DTI ratio was 25/39 percent on conventional loans used to refinance a mortgage. On conventional loans utilized to finance a home purchase, DTI ratios averaged 23/35 percent.
The average DTI ratio on FHA refinances was 29/47 percent, while FHA purchase financing DTI ratios averaged 28/41 percent.
December 2015’s average DTI ratio on all VA-guaranteed transactions was 24/40 percent.
Out of all the loans closed during December, 43 percent were refinances. Refinance share fell from 46 percent a month earlier and 43 percent a year earlier.
Last month’s refinance share was 54 percent on conventional mortgages, 21 percent on FHA-insured loans and 26 percent on VA-guaranteed mortgages.
Just 5.3 percent of December 2015’s production was adjustable-rate mortgages.
ARM share was unchanged from a month earlier and down from 5.8 percent a year earlier.
