Lenders took more risks last month based on credit scores, though other underwriting metrics didn’t ease. But compared to 12 months prior, two metrics were looser.
Conventional mortgages accounted for 63 percent of all loans closed in August, not much different than the
64 percent conventional share a year earlier.
Also slightly off the August 2014 share were loans guaranteed by the Department of Veterans Affairs, with VA share at 10 percent versus 12 percent in the year-prior period.
But the share of mortgages insured by the Federal Housing Administration has expanded to 24 percent from 20 percent.
These were among some of the findings in the Origination Insight Report from Ellie Mae Inc. The data was culled from a 66 percent sampling of Ellie’s Encompass origination platform.
The August 2015 closing rate was 66.3 percent, modestly better than 66.2 percent the prior month, much better than 61.1 percent a year prior and the best it’s been since August 2011 — the oldest data tracked by Ellie.
Closing rates were just 59.2 percent on refinances in the latest month. But the ratio soared to 70.8 percent on purchase financing.
The closing rate, which reflects
the share of loans started in the previous 90-day that have closed, was 66.2 percent on conventional loans last month. But it dropped to 60.2 percent on FHA mortgages and 61.6 percent of VA loans.
The loan origination process spanned 47 days
during the most-recent period, fewer than the 48 days it took to close a loan in July. Turnaround, however, has lengthened by eight days compared to August 2014.
On refinances, it took 50 days to close a loan last month, five days more than on purchase transactions.
Conventional closings took 47 days, while FHA turnaround was 46 days and the VA time table was 48 days.
On all types of home loans, the average FICO score was 724 —
the lowest it’s been since February 2014. Average credit scores were down a point from a month earlier and three points less than a year earlier.
FICO scores averaged 727 on conventional refinances and 756 on convention purchase-money loans.
FHA credit scores averaged 660 on refinances and 689 on purchases.
Credit scores on VA-guaranteed refinances were 707 and a point higher on purchases.
Loan-to-value ratios averaged 81 percent in August 2015 on all loan types, no different than the prior month but down from 82 percent in the year-earlier period.
Conventional LTV ratios averaged 70 percent on refinances and 80 percent on home purchase mortgages.
On FHA refinancings, LTV ratios averaged 81 percent, while the figure soared to 96 percent on purchase financing.
VA refinances had average LTV ratios of 89 percent. The ratio soared to 98 percent on VA purchase financing.
Average debt-to-income ratios an all loans were 25/38 percent in August 2015, the same as the month before but up from 24/37 percent one year previous.
The DTI ratios on conventional refinances were 25/40 percent, while they came in at 23/34 percent on purchase transactions.
DTI ratios on FHA mortgages were 28/45 percent on refinance transactions and 28/41 percent on purchase financing.
DTI ratios averaged 24/40 percent on all types of VA-guaranteed mortgages.
Adjustable-rate mortgage share widened to 5.6 percent from 5.5 percent on all loan types but came up short versus the 6.2 percent ARM share as of August 2014.
ARM share was most recently 6.9 percent on conventional mortgages, 0.9 percent on FHA-insured loans and 1.2 percent on VA-guaranteed loans.
Last month’s refinance share was 37 percent, increasing from 36 percent in July and a third in August 2014. Conventional refinance share was 48 percent in August 2015, while it was only 18 percent on FHA loans and just over a quarter on VA mortgages.
