Loan closing rates at their highest point since tracking began in August 2011
December 16, 2015 – Pleasanton, Calif. – The average time to close a loan increased by 3 days to 49 total days in November, the longest time to close since February of 2013, 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 time to close FHA, Conventional and VA loans all increased to 49, 49 and 50 days, respectively. The increase could be due to lenders adjusting to the new RESPA-TILA (Know Before You Owe) regulations.
Ellie Mae’s data also shows that the average FICO score on all closed loans fell to 721, marking the sixth consecutive month of decline. The driver of the FICO reduction appears to be average FHA refinance FICO scores falling for the second straight month to 648.
Closing rates for all loans reached their highest point, 68 percent, since Ellie Mae began tracking data in August of 2011. The closing rate on purchase loans increased to 72 percent.
“We are beginning to see the anticipated impacts of the Know Before You Owe changes that went into effect in October,” said Jonathan Corr, president and CEO of Ellie Mae. “The time to close loans has crept up to 49 days, a 3-day increase over October, while the closing rate on purchased loans increased to 72 percent. Additionally, we’ve seen the percentage of refinances increase to 46 percent of all closed loans, most likely driven by a recent dip in rates over the last three months since the 2015 high point in August.”
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 November report:
- The average 30-year rate for all loans declined for the third consecutive month, falling to 4.226.
- Refinances as a percentage of lenders’ overall loan volume increased to 46 percent.
MONTHLY ORIGINATION OVERVIEW FOR NOVEMBER 2015
|Nov. 2015*||Oct. 2015*||6 Months Ago
|1 Year Ago
|Days to Close|
|Percentage of ARM and Fixed Loan Volume|
|15 Year %||10.7%||10.3%||9.8%||10.3%|
*All references to months should be read as month ended.
PROFILES OF CLOSED AND DENIED LOANS FOR NOVEMBER 2015
|Closed First-Lien Loans
|FICO Score (FICO)||721||651|
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 August 2015 applications—to calculate an overall closing rate of 68.4 percent in November 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.