As refinance share widened last month, so did conventional share — though it
has diminished over the past year. Turnaround and closing rates both deteriorated.
Of all single-family loans that were closed during September, two-thirds were conventional mortgages. Though the share widened from 64 percent the prior month, it was thinner than 68 percent a year prior.
Another fifth of last month’s originations were loans insured by the Federal Housing Administration. FHA share was lower than 22 percent in August but unchanged from September 2016.
Mortgages guaranteed by the Department of Veterans Affairs made up a 10th of production, the same as in the last report. VA share has widened from 9 percent in the year-earlier report.
Those details were provided in the September 2017 Origination Insight Report from Ellie Mae Inc. The report reflects data culled from 80 percent of applications initiated on the Encompass platform.
September 2017’s closing rate was 71.6 percent, not quite as good a 71.7 percent the preceding month and 71.8 percent a year prior. The rate represents loan applications started in the previous 90-day cycle that have closed.
Refinance transactions had a 64.8 percent closing rate, while it was 76.4 percent on purchase financing. Conventional closing rates were 71.8 percent, FHA rates were 70.0 percent and VA closing rates were 67.7 percent.
The average loan took 43 days to close last month, a day slower than in August but five days faster than in September 2016.
Time to close was 40 days on refinances and 44 days on purchase-money transactions.
Turn times were 42 days on conventional mortgages, 44 days on FHA loans and 47 days for VA transactions.
Last month’s loan closings had an average FICO score of 724, no different than in August but seven points lower than in September of last year.
Credit scores averaged 731 on conventional refinances and 752 on conventional purchases. FHA scores were 649 on refinances and 682 on purchases. The average for VA loans was 701 on refinances and 709 on purchases.
Loan-to-value ratios averaged 79 percent in September 2017, less than the previous month’s 80 percent but more than 78 percent the same month in 2016.
Conventional mortgages had an average LTV ratio of 65 percent on refinance transactions and 80 percent on purchase financing. On FHA mortgages, the ratio was 78 percent on refinances and 96 percent on purchases.
LTV ratios averaged 89 percent on VA refinances and 98 percent on VA purchases.
The average debt-to-income ratio was 25/39 percent, the same as the preceding month and looser than 24/37 percent twelve months prior.
At 25/39 percent, DTI ratios on conventional refinances were higher than 23/35 percent on conventional purchases. The ratio on FHA loans averaged 29/47 percent on refinances and 28/43 percent on purchases.
VA DTI ratios averaged 26/41 percent on refinances and 25/41 percent on purchases.
Refinance share jumped to 38 percent from 35 percent in August, though it was still less than 45 percent in September of last year. The share was 44 percent on conventional mortgages, 22 percent on FHA loans and 30 percent on VA mortgages.
“The increase in refinances was most likely due to interest rates on closed loans dipping to 4.21 percent, the low for 2017,” Ellie Mae Chief Executive Officer Jonathan Corr said in an accompanying announcement.
