As refinance share fell to the lowest level in at least three years, so did the time it took to close a mortgage. Loan originators, meanwhile, closed fewer of the loan applications they started.
Of all residential loan applications that were taken in the previous 90-day cycle, 57.7 percent had been closed as of July.
The closing rate diminished from 60.7 percent the previous month but strengthened from 55.4 percent in the same month during 2013.
Mortgage technology provider Ellie Mae Inc. reported the metrics in its monthly Origination Insight Report. The findings were reportedly determined through a 57 percent sampling of all mortgage applications initiated on the Encompass origination platform.
Last month’s closing rate was greatest on conventional loans at 58.2 percent. Mortgages guaranteed by the Department of Veterans Affairs had a closing rate of 56.8 percent, and mortgages insured by the Federal Housing Administration had the weakest closing rate: 54.3 percent.
The average home loan took 37 days to close during July. Turnaround sped up from 41 days a month earlier and 47 days a year earlier.
Last month’s time to close was the fastest since Ellie began tracking such data in August 2011.
Conventional loans took 36 days to close, while turnaround was 38 days on FHA and VA mortgages.
Mortgage lenders eased their standards last month, with the average FICOÂ score on closed loans falling 1 point from June to 727. As of the same month last year, FICO scores averaged 737.
But on denied applications, average FICOÂ scores climbed 3 points to 689 in July — though the average was down 13 points from July 2013.
Average FICO scores were 733 on closed conventional refinances and 755 on conventional purchase transactions. They dropped to 673 on FHA refinances and 683 on FHAÂ purchases. VA loans were in the middle at 704 on refinances and 709 on purchases.
At 82 percent, the average loan-to-value ratio was unchanged from June but up from 81 percent in July 2013.
On conventional refinances, average LTV ratios were 70 percent, while they were 80 percent on purchase transactions.
FHA-insured loans had an average LTV ratio of 95 percent on purchase transactions and 84 percent on refinances.
VA-guaranteed refinances had an average LTV of 91 percent, while it jumped to 98 percent on VA purchases.
Ellie reported average debt-to-income ratios for all loans at 24/37 percent, the same as in June. One year prior, the average was 24/36 percent.
Average DTI ratios were 27/42 percent on FHA refinances and 28/41 percent on FHA purchase transactions. On VA refinances, DTI ratios averaged 25/39 percent, and they were 24/39 percent on VA purchase financing transactions. Conventional refinances had average ratios of 24/38 percent, and conventional purchases were at 22/34 percent.
FHA market share was 20 percent last month, while conventional loans accounted for 64 percent of production and 11 percent was guaranteed by the Department of Veterans Affairs. The remaining 5 percent was designated as “other” and likely represents non-agency share.
Refinance share dipped from a third to 32 percent last month and has fallen from 47 percent in July 2013. Refinance share has not been this low during any month since Ellie began collecting the data in August 2011.
While 40 percent of conventional loans closed during July were refinances, the share was just 14 percent on FHA-insured business. A little more than a quarter of VA mortgage closings were refinances.
As 30-year mortgage rates dropped to 4.388 percent from 4.421 percent in June, adjustable-rate mortgage share fell to 6.5 percent from 7.2 percent. But ARM share has increased from 5.2 percent in July 2013.
