Credit Scores on Closed Loans Fell to Lowest Level Since Ellie Mae Began Reporting Data
Refinances represented 42 percent of overall loan volume in September, a one-month increase of 5 percent
October 21, 2015 – Pleasanton, Calif. – Credit scores on closed loans fell to their lowest level since Ellie Mae began reporting data in August 2011, 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 average FICO score on all closed loans fell to 723. Credit availability on refinances appears to have increased in Q3 of 2015 as the overall average FICO and DTI have loosened materially from Q2 of 2015.
Ellie Mae’s data also showed that refinances represented 42 percent of overall loan volume in September, a 5 percent increase from August. This was likely driven by the recent dip in interest rates. Additionally, closing rates remained robust with over 66 percent of all loan applications closing for the third consecutive month. The closing rate on purchase loans increased to 71 percent.
“Average credit scores declined to the lowest levels we’ve seen since 2011,” said Jonathan Corr, president and CEO of Ellie Mae. “We are also seeing rates fall while the time to close is also decreasing. It will be interesting to see if these trends continue as we begin to see impacts from TRID.”
The Origination Insight Report mines its application data from a robust sampling of approximately 66 percent of all mortgage applications that were initiated on the Encompass® all-in-one mortgage management solution. Ellie Mae believes the Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.
Other findings from the September report:
- The average 30-year rate for all loans declined for the first time since May, falling to 4.280.
- The time to close on all loans declined for the fourth consecutive month to 46 days.
MONTHLY ORIGINATION OVERVIEW FOR SEPTEMBER 2015
|Sept. 2015*||Aug. 2015*||6 Months Ago
|1 Year Ago
|Days to Close|
|Percentage of ARM and Fixed Loan Volume|
|15 Year %||10.3%||9.8%||11.1%||9.1%|
*All references to months should be read as month ended.
PROFILES OF CLOSED AND DENIED LOANS FOR SEPTEMBER 2015
|Closed First-Lien Loans
|FICO Score (FICO)||723||668|
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 June 2015 applications—to calculate an overall closing rate of 66.8 percent in September 2015 (see full report).
About the Ellie Mae Origination Insight Report
The Origination Insight Report mines its application data from a robust sampling of approximately 66 percent of all mortgage applications that are initiated through Ellie Mae’s Encompass all-in-one mortgage management solution. In 2014, approximately 3.7 million loan applications ran through Encompass. 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. Mortgage lenders of all sizes use Ellie Mae’s Encompass® all-in-one mortgage management solution, Mavent Compliance Service, and AllRegs research, reference and education resources to improve compliance, loan quality and efficiency across the entire mortgage lifecycle. Visit EllieMae.com or call 877-355-4362 to learn more.