Credit Conditions Worsen in November

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Home lenders pulled back on the reins last month, with credit scores on funded business climbing and loan-to-value and debt-to-income ratios tightening.

Sixty percent of loan applications started during the previous 90-day cycle closed in November. The closing rate inched up from 59.4 percent a month earlier and jumped from 53.1 percent a year earlier.

November’s refinance closing rate
was 51.2 percent, while the closing rate on purchase financing transactions was 66.5 percent — the highest on record.

Mortgage technology provider Ellie Mae Inc. reported the data Wednesday in its Origination Insight Report November 2014. The numbers reflect a 57 percent sampling of loans initiated on the Ecnompass origination platform.

On conventional loans, the closing rate was 60 percent last month. Loans insured by the Federal Housing Administration had a 55 percent closing rate, and the rate on mortgages guaranteed by the Department of Veterans Affairs was 64 percent.

Turnaround time for all closed loans was cut to 39 days from 40 days in October and
42 days in November 2013.

Refinances took 37 days to close last month, and purchase transactions took 41 days.

Conventional closing times
were 38 days, FHA turnaround was 40 days and VA loans took 39 days to close. The biggest improvement was with FHA and VA refinances, which sped up seven days versus October.

Average FICO scores on loans closed in November climbed to 729 from the previous month’s 726 but were no different than in the same month last year.

Average FICO scores on conventional mortgages were 739 for refinances last month and 754 on purchase transactions. FHA credit scores were 675 on refinances and 683 on purchases.
VA refinance scores were 709, and VA purchase credit scores averaged 702.

LTV ratios slipped to 80 percent from 81 percent a month earlier and a year earlier.

Also tightening were DTI ratios, which were reduced to 24/37 percent from 25/38 percent in October and in November 2013.

Conventional loans accounted for 68 percent of November activity, while FHA-insured mortgages made up 17 percent and VA loans represented 11 percent.

Refinance share increased for the fourth consecutive month to 45 percent from 40 percent in October and was the same as it was in November 2013. Last month’s refinance share was 56 percent on conventional loans, 17 percent on FHA-insured mortgages and 35 percent on VA-guaranteed loans.

Of all closed loans last month, 10.3 percent were 15-year mortgages and 6.1 percent were adjustable-rate mortgages.

Mortgage Expert

Mortgage Daily Staff



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