Pull-Through, Processing Time, and Refinance Share Much-Improved in November

The percentage of loans originated for refinancing increased in November for the first time in 10 months Jonathan Corr, president and chief operating officer of Ellie Mae said today.  Refinancing's share of loans increased six percentage points from October to 45 percent, the highest share since July.  Corr said, "HARP-related refinancing activity also increased, as conventional refinances at 95%-plus LTV rose to 8.30% in November from 7.30% in October.  He noted that the increased activity "was probably attributable to the quarter of a point decline in the interest rates on the 30-year note in November, which declined to 4.526 percent."

Ellie Mae's Origination Insight Report for November shows the share of originations that were adjustable rate mortgages increased from 5.6 percent in October to 5.8 percent in November.  While is still a tiny share of new mortgages, use of ARMs has nearly tripled in the last year, increasing from 2.0 percent in November 2012.

Ellie Mae draws its data from a sampling of the loan applications that are handled by its mortgage management software and network.  About 20 percent of all mortgage originations in the U.S. flow through that system.

Loans closed at a faster pace in November than in October, requiring an average of 42 days as compared to 45.  Processing time for refinances dropped by six days to 37 and purchase mortgages took 45 days compared to 46.

To get a meaningful view of lender "pull-through," Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the August 2013 applications) to calculate an overall closing rate of 53.1% in November, up from 51.4% in October 2013.

"Credit requirements also continued to loosen," Corr added. "The average FICO score for all closed loans in November 2013 was 729, compared to 750 in November 2012. Also, 30% of closed loans had an average FICO score below 700 in November 2013, compared to 22% in 2012.