Refinances accounted for a smaller share of last month’s home lending. Conventional refinance share was the widest. Conventional closing rates and turn times were the best.
Conventional loans made up 63 percent of all single-family loans that were closed during May. That was moderately thinner than the 64 percent share the same month last year.
But the share of production that was for mortgages insured by the Federal Housing Administration was no different than in May 2016, when it was also 23 percent.
Another 10 percent of home lending volume was transactions guaranteed by the Department of Veterans Affairs. VA share was more broad than 9 percent twelve months earlier.
Ellie Mae Inc. revealed the data and much more in its May 2017 Origination Insight Report. The report was derived from an 80 percent sampling of all mortgage applications initiated on Ellie’s Encompass platform.
The closing rate, a measure of the share of applications in the previous 90-day cycle that had closed, was 70.4 percent. The rate improved from 69.4 percent a month earlier but was slightly thinner than 70.6 percent a year earlier. The latest refinance closing rate was 63.5 percent, and the purchase closing rate was 75.3 percent. At 70.4 percent, the conventional rate was higher than 69.3 percent on FHA transactions and 67.1 percent on VA production.
The time to close a single-family loan remained at 42 days, though that was three days faster than the same month in 2016. Turnaround was 41 days on refinances and 42 percent on purchases. Conventional closing time was 41 days, the FHA time table was 43 days, and VA mortgages took 45 days to close.
Borrowers who closed in May 2017 had an average credit score of 723. That was slightly tighter than 722 the prior month and slightly looser than 724 a year prior. Scores were tighter on conventional loans at 728 for refinancing and 753 on purchase financing. FHA credit scores were more risky at 650 on refinances and 683 on purchases, while VA refinance scores averaged 701 and purchase scores were 710.
There was no change in the 80 percent average loan-to-value ratio, though it was minimally looser than 724 in the same month during 2016. Conventional refinance LTV ratios averaged 66 percent, and conventional purchases were 81 percent. LTV ratios averaged 78 percent on FHA refinances and 96 percent on FHA purchases. VA LTV ratios were the highest at 88 percent on refinances and 98 percent on purchases.
Average debt-to-income
ratios were no different than 25/39 percent in April but have relaxed from 24/38 percent in May of last year. DTI ratios were 25/40 percent on conventional refinance transactions and 23/35 percent on purchases. FHA was much more lax in its average DTI ratio at 29/46 percent on refinance transactions and 28/43 percent on purchase transactions. On VA closings, DTI ratios averaged 25/41 percent on refinances and 24/41 percent purchases.
Refinances made up 32 percent of all transactions, with refinance share cut from 35 percent in April and 37 percent in May 2016. The proportion climbed to 39 percent on conventional loans, dropped to 18 percent on FHA loans and was 27 percent on VA mortgages.
“The start of the peak summer homebuying period combined with fewer refinances due to higher interest rates, drove purchases to the largest percentage of total loans since we began tracking data in 2011,” Ellie Mae President and Chief Executive Officer Jonathan Corr said in an accompanying statement.
However, interest rates have been
improving as of lately, most -recently driving up refinance share for the fourth consecutive week in the U.S. Mortgage Market Index report from Mortgage Daily for the week ended June 16.
