Lenders’ share of purchase loan volume climbs from 41% to 63% since February
August 19, 2015 – Pleasanton, Calif. – Interest rates on mortgage loans in July reached their highest levels since the fall of 2014, 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 rate on a 30-year fixed-rate mortgage rose to 4.29 percent last month, up from 4.12 percent in June and its highest level since October 2014, when the average rate was 4.37 percent.
Ellie Mae’s data also showed that lenders’ share of purchase loan volume climbed to 63 percent, an increase of 22 points since February. Nearly two-thirds of loan applications, or 66.2 percent, closed in July, the highest level since Ellie Mae began tracking this data in August 2011. Meanwhile, the closing rate on purchase loans climbed above 70 percent for the first time in four years.
Despite the higher rates, the average FICO score on closed loans fell for the third consecutive month to 725, its lowest level since February 2014.
“Mortgage rates appear to be rising in anticipation of the Federal Reserve’s first rate increase since the global financial crisis,” said Jonathan Corr, president and CEO of Ellie Mae. “However, credit availability appears to be broadening, which is certainly good news for consumers and the housing market.”
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 July report:
- The average closing period for all loans held steady at 48 days after climbing four consecutive months.
- Purchase loans as a share of lenders’ conventional loan volume continued to climb, rising three percentage points to 54 percent, the highest level in nearly a year.
MONTHLY ORIGINATION OVERVIEW FOR JULY 2015
| July 2015* | June 2015* | 6 Months Ago(Jan. 2015*) | 1 Year Ago(July 2014*) | |
| Closed Loans | ||||
| Purpose | ||||
| Refinance | 36% | 38% | 51% | 32% |
| Purchase | 63% | 61% | 48% | 67% |
| Type | ||||
| FHA | 24% | 23.68% | 15% | 20% |
| Conventional | 62% | 63.01% | 70% | 64% |
| VA | 10% | 9.74% | 11% | 11% |
| Days to Close | ||||
| All | 48 | 48 | 40 | 37 |
| Refinance | 52 | 52 | 39 | 37 |
| Purchase | 45 | 45 | 40 | 38 |
| Percentage of ARM and Fixed Loan Volume | ||||
| ARM % | 5.5% | 4.9% | 5.1% | 6.5% |
| 15 Year % | 9.2% | 9.7% | 10.8% | 8.9% |
| 30-Year Rate | ||||
| Average | 4.288% | 4.118% | 4.154% | 4.388% |
*All references to months should be read as month ended.
PROFILES OF CLOSED AND DENIED LOANS FOR JULY 2015
| Closed First-Lien Loans (All Types) |
Denied Loans(All Types) | |
| FICO Score (FICO) | 725 | 668 |
| Loan-to-Value (LTV) | 81 | 84 |
| Debt-to-Income (DTI) | 25/38 | 28/48 |
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 April 2015 applications—to calculate an overall closing rate of 66.2 percent in July 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.