Mortgage Closing Rate, Turnaround Improve

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As a bigger share of mortgage applications were funded last month, the number of days it took to close a home loan was reduced.

At 59.4 percent during October, the closing rate strengthened from 58.1 percent a month earlier and 51.4 percent a year earlier.

But there was significant disparity in the 66.1 percent closing rate on purchase financing versus the 49.3 percent rate on refinancing.

Mortgage technology provider Ellie Mae Inc. reported the statistics in its Origination Insight Report October 2014. The findings were derived from a sampling of closed loan applications initiated on the Encompass origination platform.

Conventional mortgages had a 59.4 percent closing rate last month, while it fell to 56.0 percent on loan insured by the Federal Housing Administration. But on mortgages guaranteed by the Department of Veterans Affairs, the closing rate was an impressive 63.0 percent.

Turnaround on all closed loans was trimmed to 40 days from 41 days in September. It took five fewer days to close a loan than it did in October 2013.

Refinance turnaround was 39 days, while it took and average 40 days to close a purchase transaction.

The time to close a conventional mortgage was 38 days versus 41 days for both FHA and VA loans.

Last month’s average FICO score of 726 on closed loans was the same as in September but six points less than in October 2013. On denied loans, scores sank 13 points from September to 681.

On just refinance transactions, FHA credit scores dropped nine points from a month earlier to 667, while conventional scores rose two points to 734 and VA scores climbed two points to 704.

On purchase financing, average FHA scores inched up a point to 683, conventional scores slipped a point to 754 and VA scores dropped four points to 701.

Average loan-to-value ratios dipped to 81 percent in October from the previous month’s 82 percent but was the same as a year previous.

Ellie reported the average debt-to-income ratio at 25/38 percent, more liberal than the 24/37 percent average in September but unchanged from the same month in 2013. Applications that were turned down saw DTI ratios rise to 29/46 percent from the prior month’s 28/45 percent.

Almost two-thirds of last month’s production was conventional business, while FHA share was 19 percent and VA share came in at 11 percent.

Adjustable-rate mortgages accounted for 6.3 percent of October activity, the same as a month earlier. But ARM share was wider than 5.6 percent a year earlier. ARM share was nearly 8 percent on conventional business compared to less than 2 percent on FHA loans and VA loans.

Fifteen-year mortgage share climbed to 9.6 percent from 9.1 percent but tumbled from 15.5 percent in October 2013.

Forty percent of October’s originations were refinances. Refinance share widened for the third consecutive month from 36 percent in September and 39 percent in the same month last year.


Mortgage Daily Staff


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