The 5-point surge in the share of refinancing loans that closed in January didn't survive the month. Ellie Mae's Origination Insight Report shows that share dropped from 45 percent to 43 percent in February. Refinancing lost market share for both VA and conventional loans but held steady at an already low 28 percent of FHA mortgages. Purchase loans grew their share 2 percentage points, rising to 57 percent.
"As expected, we are seeing the percentage of refinances taper back off to the projected industry levels," said Jonathan Corr, president and CEO of Ellie Mae. "And with interest rates on the rise, we're seeing the purchase market begin to gain some momentum. We know that the shift to a purchase market will drive the shortened time to close and we will watch to see if the trend continues into the spring and summer months."
The distribution of loans across guarantors was unchanged from January at 19 percent FHA loans, 67 percent conventional, and 10 percent VA. The VA share has not changed since February 2017.
The time to close all loans decreased by two days to 42 in February with the time to close purchase loans falling from 47 days to 45 and refinancing from 40 to 37 days. Ellie Mae called the decline from the average of 47 days in 2017 "significant." The required time to close each loan type decreased from January to February, FHA loans from 47 days to 43 days, conventional loans from 43 to 41 days, and VA loans from 50 to 47 days.
The average interest rate for 30-year fixed rate loans closed during the month rose from 4.330 in January to 4.480 in February, the highest rate since May of 2014. The percentage of closed ARMs held at 5.5 percent for the second month.
Closing rates decreased slightly with rates for all loans decreasing from 70.9 percent to 70.6 percent and closing rates on refinances dipping from 65.5 percent to 65.0 percent. Closing rates on purchases held at 75.7 percent for the second month. To calculate closing rates Ellie Mae samples loan applications initiated 90 days earlier, in this case in November 2017.
Overall FICO scores for closed loans held steady at 721 for the second month. LTV increased from 77 to 78 and DTI held at 26/40.
The Origination Insight Report mines data from a sample of approximately 80 percent of all mortgage applications that were initiated on Ellie Mae's mortgage management system. The company says its report is a strong proxy of the underwriting standards employed by lenders across the country.