The good news is that productivity and purchase-share increased last month on home lending. But credit conditions tightened and turnaround slowed.
Conventional mortgages made up 64 percent of all residential loans that were closed during May. The share was no different than one month prior.
Another 23 percent were loans insured by the Federal Housing Administration, and 9 percent were guaranteed by the Department of Veterans Affairs.
There was also no change from April in FHA or VA share.
Ellie Mae Inc. delivered the data in its May 2016 Origination Insight Report.
The findings were derived from a 75 percent sampling of all loan applications initiated on the Encompass origination platform.
The time to close a loan was 45 days during the most-recent month, lengthening by one day from April but one day shorter than in May 2015.
Refinance turnaround was 44 days in May 2016, while purchases took 45 days to close.
On conventional mortgages, the time to close was 44 days, while FHA turn times were 45 days and VA turnaround was 49 days.
Last month’s closing rate was 70.6 percent, improving from 68.9 percent in April and 64.0 percent in May 2015.
The closing rate, which is based on the share of loan applications started in the previous 90-day cycle, was 67.2 percent on May 2016’s refinances and 74.5 percent on purchases.
On both conventional and FHA loans, the closing rate was 71.2 percent, while it was just 63.8 percent on VA mortgages.
The average FICO score on all loans was 724, rising from 723 in April but down from 730 in May 2015.
Conventional refinances had an average credit score of 732 in the latest report, and conventional purchase credit scores were 754.
Last month’s credit scores averaged 654 on FHA refinances and 686 on FHA purchase financing.
VA credit scores averaged 706 for refinance closings and 707 for purchase-money fundings.
Loan-to-value ratios inched up to 81 percent in May 2016 from the prior month’s 80 percent. Average LTV ratios were the same as a year prior.
Conventional LTV ratios averaged 68 percent on last month’s refinance transactions and
81 percent on purchase transactions.
FHA LTV ratios averaged 79 percent on refinances and 96 percent on purchase-money transactions.
LTV ratios averaged 89 percent on VA refinances, while the average shot up to 98 percent on VA purchase financing.
Ellie reported last month’s average debt-to-income ratio at 24/38 percent,
tighter than 25/38 percent in April but looser than 24/37 percent in May of last year.
For conventional refinancings, DTI ratios averaged 25/38 percent in April 2016. Conventional purchase financing had an average DTI ratio of 22/34 percent.
DTI ratios averaged 28/45 on FHA refinances and 27/41 percent on FHA purchases.
April 2016’s average VA DTI ratios were 24/40 percent on refinances and purchases.
May 2016’s refinance share
was 37 percent, thinning from 40 percent a month earlier and 42 percent a year earlier.
However, a recent drop in average interest rates could push refinance share higher in upcoming reports.
Conventional refinance share was 47 percent last month, while the share was 17 percent
on FHA loans and 22 percent on VA mortgages.
