Residential loan originators are working harder to close loans, pushing up the closing ratio. The only product to see diminished productivity was government-insured refinances.
August’s closing ratio was 61 percent. The rate reflects the percentage of loan applications started during the previous 90-day cycle that have closed.
Mortgage originators improved on the previous month’s level of productivity, when the closing rate worked out to 58 percent.
The August 2013 closing rate was 53 percent.
The numbers were included in Ellie Mae’s monthly Origination Insight Report. The findings reflect a 57 percent sampling of all applications initiated on the Encompass origination platform.
“The closing rate in August was the highest since we began tracking this data three years ago: 61.1 percent for all loans and 65.1 percent for purchase loans,” Ellie Mae President and Chief Operating Officer Jonathan Corr stated in the report. “This was further indication that lenders are working every deal and making sure leads don’t slip away”
On refinances, the closing rate was just 54 percent.
Last month’s closing rate was 62 percent on conventional loans, 56 percent on loans insured by the Federal Housing Administration and 61 percent on loans guaranteed by the Department of Veterans Affairs.
FHA refinances were the only category with a diminished closing rate — falling to 42 percent from 46 percent in July.
The average loan took 39 days to close in August, slowing from 37 days the previous month but speedier than the 41-day turnaround in the same month last year.
The time to close a refinance lengthened to 39 days from 37 days in July, and purchase turnaround was unchanged at 38 days.
There was no change in loan quality metrics compared to July, with the average FICO score at 727, the average loan-to-value ratio at 82 percent and the average debt-to-income ratio at 24/37 percent.
In addition, average LTV and DTI ratios were also unchanged from August 2013 — though credit scores were down from 734.
Conventional loans accounted for 64 percent of last month’s business. FHA share was 20 percent, and the VA proportion worked out to 12 percent.
Adjustable-rate mortgages made up 6.2 percent of August originations, off from the previous month’s 6.5 percent. ARM share, however, widened from 5.9 percent in August of last year.
Conventional loan ARM share was 7.5 percent, while FHA ARM share worked out to only 1.5 percent.
ARM share on VA-guaranteed loans contrasted overall ARM share, increasing to 1.7 percent from 1.5 percent in July.
Refinance share edged up to a third from 32 percent in the previous report but came up short of the 43 percent share in the year-earlier report.
August’s refinance share was just 14 percent on FHA originations, while it jumped to 41 percent on conventional production.
