Ellie Mae says Loan Closing Rate Highest in Four Years

Ellie Mae said this week that the closing rate for purchase mortgages reached 70.7 percent in July up from 69.0 in June.  This is the highest rate since the company started tracking this data in August 2011 and is calculated based on a sampling of loan applications initiated 90 days earlier.

The closing rate for all loans was 66.2 percent.  The highest rate was for VA purchase loans at 72.5 percent and the lowest was for FHA refinances at 42.5 percent.  Those loans were the only ones for which the closing rate did not improve over June.

The share of purchase loans rose to 63 percent, up 22 percent since February.  The refi share for all loan types was below the corresponding average share for all of 2014.  The purchase share of conventional loans rose 3 percentage points from June to 54 percent, the highest since last September.

Sixty-two percent of loans originated during the month were conventional loans, 24 percent were FHA, and 10 percent were VA.  These percentages were essentially unchanged from the previous month.

The number of days required to close loans was also about the same as in June, 48 days.  Refinances required an average of 52 days and purchase loans 45 days. 

The average FICO score on a closed loan dropped 2 points to 725, the second decrease in as many months but only 1 point below the 2014 average.  The average score on a denied loan, 668 was 4 points lower than in June and down by 20 points from the average for all of 2014. The loan-to-value ratio for a closed loan was 81, unchanged since May, and the debt to income ratio was also static at 25/38.

"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."

Ellie Mae's Origination Insight Report mines its application data from a 66 percent sampling of all mortgage applications that were initiated on Ellie Mae's mortgage management software.