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Latest Ellie Mae Origination Insight Report suggests there still may be life in Refis
Percentage of refinances increases for first time in 2014, though closing rate on mortgage refinancings falls nearly 6 percent.
PLEASANTON, CA (October 23, 2014) — Refinancings as a percentage of overall mortgage volume jumped 3 percent from August to account for 36 percent of closed loans in September, 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 September 2014 report also found the closing rate on mortgage refinancings fell nearly 6 percent to 48.3 percent in September, the lowest since February.
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 that are being employed by lenders across the country.
“It appears there may be life left in the refi market, as a number of consumers are still taking advantage of recovering equity in their homes and low interest rates to knock down their mortgage payments,” said Jonathan Corr, president and COO of Ellie Mae.
The percentage increase in refinancing activity was the first monthly increase in 2014, the report found. Among other findings in the report:
- The average 30-year interest rate for all loans dropped for the fifth straight month to 4.381%, the lowest rate since July 2013
- The average number of days to close a loan climbed above 40 days for the first time since June
- The average number of days to close purchase loans rose 3 days from August to September
“While rates continue to fall, loans have been taking slightly longer to close since the peak of the summer buying season,” Corr said. “It will be interesting to see whether these trends continue as we head into the winter, a traditionally slower time for housing sales.”
MONTHLY ORIGINATION OVERVIEW FOR SEPTEMBER 2014
| September 2014* | August 2014* | 6 Months Ago
(March 2014*) |
1 Year Ago
(Sept. 2013*) |
|
| Closed Loans | ||||
| Purpose | ||||
| Refinance | 36% | 33% | 40% | 42% |
| Purchase | 63% | 66% | 60% | 58% |
| Type | ||||
| FHA | 19% | 20% | 22% | 19% |
| Conventional | 64% | 64% | 65% | 70% |
| VA | 12% | 12% | – | – |
| Days to Close | ||||
| All | 41 | 39 | 40 | 42 |
| Refinance | 40 | 39 | 37 | 40 |
| Purchase | 41 | 38 | 41 | 43 |
| ARMs vs. Fixed / Length / Rate | ||||
| ARM % | 6.3% | 6.2% | 7.4% | 5.5% |
| 15 Year % | 9.1% | 9.1% | 12.4% | 15.5% |
| 30-Year
Note Rate |
4.381% | 4.386% | 4.604% | 4.761% |
*All references to months should be read as month ended.
PROFILES OF CLOSED AND DENIED LOANS FOR SEPTEMBER 2014
| Closed First-Lien Loans (All Types) |
Denied Loans
(All Types) |
|
| FICO Score (FICO) | 726 | 694 |
| Loan-to-Value (LTV) | 82 | 81 |
| Debt-to-Income (DTI) | 24/37 | 28/45 |
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 (i.e., the June 2014 applications) to calculate an overall closing rate of 58.1percent in September 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 nonqualification.
The Origination Insight Report details aggregated, anonymized data and 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.
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