Home lenders loosened the purse strings in 2014– with credit scores on closed loans moving lower and debt-to-income and loan-to-value ratios both moving higher.
The closing rate on residential loans inched up to 60.2 percent in December from the prior month’s 60.0 percent. The rise was more significant versus December 2013, when the closing rate was just 54.3 percent.
During all 12 months of last year, the closing rate was 58.2 percent, better than 54.0 percent the previous year.
Ellie Mae reported the metrics in its Origination Insight Report December 2014.
Last year’s closing rate on refinances was 50.9 percent, while it rose to 63.3 percent on purchase transactions. Mortgages insured by the Federal Housing Administration had a 54.7 percent closing rate, while it was 59.7 percent on conventional loans.
The time to close a residential loan lengthened to 42 days in December from 39 days the prior month. Conventional loans and mortgages guaranteed by the Department of Veterans Affairs took 41 days, while FHA loans took 42 days.
Overall closing times have shortened since December 2013, when turnaround was 46 days.
For all of 2014, it took 40 days to close the average home loan, six days faster than in 2013.
Average FICO scores slipped 1 point in December to 728. Scores averaged 726 for the entire year, loosening from 738 in 2013.
Last year’s average score was 673 for FHA refinances and 684 for FHA purchase financing.
Conventional refinances averaged 733, while conventional purchases were 755.
The average LTV ratio in 2014 was 82 percent, just above the 81 percent in 2013.
Last year’s average LTVs jumped to 95 percent on FHA purchase transactions and fell to 71 percent on conventional refinances.
DTI ratios averaged 24/37 percent versus 24/36 percent in 2013.
Last year’s DTI ratios were 23/34 percent on conventional purchase transactions and 24/39 percent on refinance transactions. The ratios came in at 28/41 on FHA purchases and 26/42 percent on FHA refinances.
FHA-insured mortgages accounted for 20 percent of last year’s originations, widening from 19 percent in 2013. Conventional share fell to 65 percent from 70 percent.
Adjustable-rate mortgages represented 5.8 percent of December’s business, narrowing from 6.1 percent the previous month and 6.6 percent in the final month of 2013.
Full-year ARM share widened, however, to 6.8 percent in 2014 from 4.2 percent.
Refinance share slipped to 43 percent last month from 45 percent in the last report and 46 percent in the year-earlier report.
December 2014’s refinance share was just 16 percent on FHA loans and 53 percent on conventional loans.
Full-year refinance share was 38 percent, sliding from 53 percent in 2013. Purchase share, meanwhile, leapt to 61 percent in 2014 from 47 percent.
