Standard purchase closure rates reach a fresh high in report at nearly 74%

PLEASANTON, Calif. – February 17, 2016 – 2016 started off with the typical time to close a loan rising to 50 complete days according to the latest Origination Insight Report released by Ellie Mae® (NYSE:ELLI), a top supplier of advanced on demand applications solutions and services for the residential mortgage business. The typical time to close a purchase loan rose to 51 while the typical time to close a refinance rose from 47 to 48 days. The typical time to close FHA loans rose from 49 days to conventional loans and 51 days remained mostly unchanged at 49 days. Time to close VA loans rose from 52 to 53 days.

Standard purchase closure rates reached a new high, rising above 73 percent for the very first time since Ellie Mae started monitoring data in August 2011. One percentage point rose to 68 percent. While purchase closure rates rose to over 72 percent refinance closure rates rose to almost 65 percent.

When it comes to loan function, purchases represented 52 percent of all shut loans while refinances as a percentage of lenders’ total loan volume soared to 47 percent.

Ellie Mae’s data reveals the average FICO score on shut loans fell from 722 in December in January, the biggest month-to-month drop since mid-2015 to 719. The typical FHA refinance FICO score fell to 645, down from 651 in December.

We continue to find time to close over month reaching since TRID went into effect 50 days, which is up four days, said Jonathan Corr, president and CEO of Ellie Mae. “We’re also finding a rise in purchase and refinance closure rates as they grow to 72.2 percent and 64.9 percent respectively, in January.”

The Origination Insight Report mines its program information from a robust sampling of about 66 percent of all mortgage applications that were started on the Encompass® all in one mortgage management option. Ellie Mae considers the Origination Insight Report is a powerful proxy of the underwriting standards used by lenders across the country.

Other findings from the January report:

  • The typical 30-year rate for all loans rose marginally to 4.30.
  • DTI stayed consistent for the fourth consecutive month at 25/39.

MONTHLY ORIGINATION SUMMARY FOR JANUARY 2016

January
2016*
December
2015*
6 Months Past
(Jul. 2015)*
1 Year Past
(Jan. 2015)*
Closed Loans
Goal
Refinance 47% 43% 36% 51%
Purchase 52% 56% 63% 48%
Type
FHA 22% 22% 24% 15%
Standard 65% 65% 62% 70%
VA 10% 9% 10% 11%
Days to Shut
All 50 49 48 40
Refinance 48 47 52 39
Purchase 51 50 45 40
Percent of ARM & Given Loans
ARM % 5.3% 5.3% 5.5% 5.1%
15 Year % 11.1% 10.8% 9.2% 10.8%
30-Year Rate
Typical 4.30% 4.26% 4.288% 4.154%

*All references to months should be read as month finished.

PROFILES OF CLOSED AND REFUSED LOANS FOR JANUARY 2016
Shut First-Lien Loans (All Kinds) Refused Loans
(All Types)
FICO Score (FICO) 719 645
Loan-to-Value (LTV) 79 88
Debt-to-Income (DTI) 25/39 28/50

To get a substantive view of lender pull through, Ellie Mae reviewed a sampling of loan applications began 90 days past—or the October 2015 applications—to compute an entire closure speed of 68.4 percent in January 2016 (see complete report).

About the Ellie Mae Origination Insight Report

The Origination Insight Report mines its program information from a robust sampling of about 66 percent of all mortgage applications that are started through Ellie Mae’s Encompass all in one mortgage management option. In 2014, about 3.7 million loan applications ran through Encompass. Given Ellie Mae’s market share and the size of this sample, the Company considers the Origination Insight Report is a powerful proxy of the underwriting standards that are being used by lenders across the country.

The Origination Insight Report focuses on loans that closed or were refused in a particular month and compares their features to similar loans that closed or were refused three and six months before. The closure rate is computed on a 90-day cycle in place of on a monthly basis because most loan applications generally require one-and-a-half to two months from application to close. Loans that don’t close could be programs or busy programs removed by consumers or refused for incompleteness or non-qualification.

The Origination Insight Report facts aggregated anonymized data. The report will not reveal customer-unique or proprietary info.

News organizations have the right to reuse this data, supplied that Ellie Mae, Inc. is credited as the source.

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