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Mortgage Closing Rates, Turn Times Improve

A bigger share of loan applications were closed last month, while it took less time to complete the loan process. But credit conditions tightened except for on conventional purchase financing.

Of all residential loan applications initiated during the previous 90-day cycle, 62.4 percent closed during the month of January.

The closing rate improved from the previous month, when 60.2 of applications closed. It was the fourth month in a row that conversions improved.

During the same month last year, the closing rate came in at 54.9 percent.

Ellie Mae Inc. relayed the data in its Origination Insight Report for January 2015. The findings were determined from a two-thirds sample of closed-loan applications that were processed using the Pleasanton, Calif.-based company’s technology.

Last year, around 3.7 million applications ran through Ellie’s Encompass mortgage management solution.

Refinances had a 56.5 percent closing rate last month, and the purchase financing closing rate was 68.3 percent.

January 2015’s closing rate was 62.7 percent on conventional loans, 57.0 percent on mortgages insured by the Federal Housing Administration and 65.5 percent on loans guaranteed by the Department of Veterans Affairs.

On average, it took 40 days to close a loan in January. Turnaround time was reduced from 42 days in the final month of last year and 45 days in the first month of last year.

Refinances took 39 days to close, while purchase financing turnaround was 40 days. Conventional turn times averaged 39 days, FHA turnaround was 42 days and the time to close a VA mortgage was 39 days.

The average FICO score on last month’s book of business was 731, rising from 728 in December and 724 in January 2014.

FICO scores averaged 741 on refinances. Credit scores on conventional purchase transactions declined to 752 from 753 in December.

On FHA refinances, FICO scores were 674, and they were 682 on FHA purchase transactions.

Credit scores were 716 on VA refinances and 704 on VA purchases.

Average loan-to-value ratios fell to 79 percent in January from
the previous month’s 80 percent and the year-earlier’s 82 percent.

Conventional refinance transactions had an average LTV ratio of 70 percent, and conventional purchase LTV ratios were 80 percent.

LTV ratios on FHA refinance transactions averaged 82 percent, while they came in at 95 percent on FHA purchase financing.

VA mortgages had an average LTV of 90 percent on refinancings and 98 percent on purchase financings.

Also tightening were average debt-to-income ratios, which declined to 24/37 percent from 24/38 percent in December and 25/39 percent in January 2014.

On just conventional refinances, DTIs were 24/37 percent. On conventional purchases, average DTIs increased to 23/35 percent from 23/34 percent in December.

FHA DTI ratios were 27/41 percent for refinancing and 28/41 percent for purchase financing.

For VA mortgages, DTI ratios were 24/39 percent on both refinances and purchases.

Conventional loans accounted for 70 percent of last month’s production, while FHA loans made up another 15 percent and 11 percent were VA mortgages.

Reflecting low fixed rates, adjustable-rate mortgage share fell to 5.1 percent in January from 5.8 percent a month earlier and 7.2 percent a year earlier.

ARM share was 5.6 percent on conventional mortgages, 0.7 percent on FHA loans and 0.6 percent on VA mortgages.

Refinance share jumped to 51 percent from 43 percent in December and was also fatter than 47 percent in January 2014. Refinance share was at its highest level since June 2013.

January 2015’s refinance share was 62 percent on conventional loans, 17 percent on FHA-insured mortgages and 42 percent on VA originations.

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