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FHA and Refi Share Down as Conv, Purchase Share Up

As refinance share fell to a new low last month, more loans in process closed. Turnaround lengthened by a day, and government-insured share fell over the past year as conventional share rose.

Conventional mortgages accounted for exactly two-thirds of all single-family loans closed during June. The share has widened from 64 percent one year earlier.

Mortgages insured by the Federal Housing Administration made up another fifth of last month’s production. FHA share has thinned from 22 percent in June 2017.

A 10th of all home loans closed last month were guaranteed by the Department of Veterans Affairs. VA share was exactly the same as it was a year previous.

Those statistics were delivered by Ellie Mae Inc. in its
June 2018 Origination Insight Report.

Out of all loans started in the prior 90-day cycle, 70.5 percent had closed as of June, more than 70.2 percent the preceding month and 70.3 percent one year prior. The closing rate was 63.3 percent on refinances and three-quarters on purchases. Conventional mortgages had a 70.4 percent closing rate, while it was 68.3 percent on FHA originations and 67.5 percent on VA transactions.

The average loan took 42 days to close, a day longer than in May. But turnaround was a day faster than a year previous. Refinancing closing times were 37 days, and purchase time tables were 44 days. Time to close was 41 days on conventional transactions, 43 days on FHA loans and 46 days for VA fundings.

Ellie’s data indicated that last month’s average credit score of 726 was up two points from May and from June 2017. Credit scores were 726 on conventional refinances and 753 on conventional purchases. FHA scores were 658 on refinances and 677 on purchases, and VA scores averaged 691 on refinances and 711 on purchases.

Average loan-to-value ratios inched up to 80 percent from 79 percent and were the same as in the report from a year ago. Conventional LTV ratios were 63 percent on refinances and 80 percent on purchases, while FHA ratios were 79 percent on refinances and 95 percent on purchases. VA refinances had 90 percent ratios, and VA purchases averaged 98 percent.

At 26/39 percent, the average debt-to-income ratio was no different than in May and higher than 25/38 percent the same month in 2017. On conventional transactions, DTIs averaged 26/40 percent on refinances and 24/36 percent on purchase transactions. FHA refinance DTI ratios were 28/43 percent, and the FHA purchase ratio was 29/44 percent. VA closings averaged 26/40 percent on refinances and 24/36 percent on purchases.

Refinance share of 29 percent was lower than 30 percent in May, less than 32 percent in the report from a year ago, and the lowest it has ever been since Ellie began tracking the data in August 2011.
Refinance share was 31 percent on conventional loans, 19 percent on FHA originations and 23 percent on VA closings.

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