Refinancing activity grew 4 percent between September and October to account for 40 percent of overall mortgage volume—the highest level in six months, according to the latest Origination Insight Report released by Ellie Mae® (NYSE:ELLI), a leading provider of innovative on-demand software solutions and services for the residential mortgage industry. The October 2014 report also found that the average 30-year interest rate for all loans fell for the sixth consecutive month to 4.371 percent, the lowest average since July 2013.
The Origination Insight Report mines its application data from a robust sampling of approximately 57 percent of all mortgage applications that were initiated on the Encompass® origination platform. The Origination Insight Report is considered a strong proxy of the underwriting standards employed by lenders across the country.
“Refinancing activity in October was at the highest level since March of this year, thanks largely to the current interest rate environment," said Jonathan Corr, president and COO of Ellie Mae. "Low rates are creating opportunities for homeowners to either lower their payments or capitalize on their homes’ equity.”
According to the Origination Insight Report, 33 percent of closed loans in October had an average FICO score of under 700 compared to 28 percent in October 2013. Among other findings in the report:
- Despite the increase in refinance share, the average time to close a refi dropped from 40 days to 39 days.
- The average 30-year interest rate for all loans fell to 4.371 percent and the average 30-year interest rate for FHA loans declined to 4.237 percent. Both were at the lowest level since July 2013.
- Closing rates on purchase loans rose to 66.1 percent, the highest percentage since Ellie Mae began tracking this data in August 2011.
MONTHLY ORIGINATION OVERVIEW FOR OCTOBER 2014 | ||||||||||||
| September | 6 Months Ago | 1 Year Ago | ||||||||||
| October 2014* | 2014* | (April 2014*) | (Oct. 2013*) | |||||||||
Closed Loans | ||||||||||||
| Purpose | ||||||||||||
| Refinance | 40% | 36% | 37% | 39% | ||||||||
| Purchase | 60% | 63% | 63% | 61% | ||||||||
| Type | ||||||||||||
| FHA | 19% | 19% | 22% | 19% | ||||||||
| Conventional | 65% | 64% | 64% | 68% | ||||||||
| VA | 11% | 12% | - | - | ||||||||
| Days to Close | ||||||||||||
| All | 40 | 41 | 39 | 45 | ||||||||
| Refinance | 39 | 40 | 37 | 43 | ||||||||
| Purchase | 40 | 41 | 40 | 46 | ||||||||
| ARMs vs. Fixed / Length / Rate | ||||||||||||
| ARM % | 6.3% | 6.3% | 7.6% | 5.6% | ||||||||
| 15 Year % | 9.6% | 9.1% | 12.2% | 15.5% | ||||||||
30-Year Note Rate | 4.371% | 4.381% | 4.622% | 4.750% | ||||||||
*All references to months should be read as month ended.
PROFILES OF CLOSED AND DENIED LOANS FOR OCTOBER 2014 | ||||||
| Closed First-Lien Loans | Denied Loans | |||||
| (All Types) | (All Types) | |||||
| FICO Score (FICO) | 726 | 681 | ||||
| Loan-to-Value (LTV) | 81 | 80 | ||||
| Debt-to-Income (DTI) | 25/38 | 29/46 | ||||
More information and analysis of closed and denied loans by loan purpose and investor are available in the full report at http://www.elliemae.com/about-us/news-reports/ellie-mae-reports/.
To get a meaningful view of lender pull-through, Ellie Mae reviewed a sampling of loan applications initiated 90 days prior—or the July 2014 applications—to calculate an overall closing rate of 59.4 percent in October 2014 (see full report).
About the Ellie Mae Origination Insight Report
In 2013, approximately 3.5 million loan applications ran through Ellie Mae's Encompass mortgage management solution. The Origination Insight Report mines its application data from a robust sampling of approximately 57 percent of all mortgage applications that were initiated on the Encompass origination platform. Given the size of this sample and Ellie Mae’s market share, the Company believes the Origination Insight Report is a strong proxy of the underwriting standards that are being employed by lenders across the country.
The Origination Insight Report focuses on loans that closed or were denied in a specific month and compares their characteristics to similar loans that closed or were denied three and six months earlier. The closing rate is calculated on a 90-day cycle rather than on a monthly basis because most loan applications typically take one and a half to two months from application to closing. Loans that do not close could still be active applications or applications withdrawn by consumers or denied for incompleteness or non-qualification.
The Origination Insight Report details aggregated, anonymized data. The report does not disclose client-specific or proprietary information.
News organizations have the right to reuse this data, provided that Ellie Mae, Inc. is credited as the source.
About Ellie Mae
Ellie Mae (NYSE:ELLI) is a leading provider of innovative on-demand software solutions and services for the residential mortgage industry. Ellie Mae’s all-in-one Encompass® mortgage management solution provides one system of record that allows banks, credit unions and mortgage lenders to originate and fund mortgages and improve compliance, loan quality and efficiency. Visit EllieMae.com or call 877.355.4362 to learn more.
© 2014 Ellie Mae, Inc. Ellie Mae®, Encompass®, AllRegs®, DataTrac®, Ellie Mae Network™Total Quality Loan™, TQL™ and the Ellie Mae logo are registered trademarks or trademarks of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other company and product names may be trademarks or copyrights of their respective owners.
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