Ellie Mae: Purchase Loan Share at Post-Recession Highs

Loans for home purchasing continue to dominate mortgage originations and Ellie Mae says they may now represent the largest share of loans since the recession.  The company's May Origination Insight Report put the purchasing share at 70 percent, the largest percentage at least since they started tracking the figure in 2011.  Purchase loans made up had 66 percent of closed conventional loans, 75 percent of VA loans, and 80 percent of those backed by FHA.

The 30-year interest rate for loans closed during the month was also the highest in Ellie Mae's history, up 5 basis points from April to 4.84 percent.

The distribution of loans across loan types was unchanged for conventional and FHA loans at 66 percent and 28 percent respectively while VA loans upped its  share from 9 to 10 percent.  The percentage of originations that were adjustable rate mortgages (ARMs) stayed at 6.6 percent for the second month, the highest since June 2014.

Closing time for all loans held steady across the board at 41 days for the third month.  Refinance loans took an average of 37 days and purchase loans 43 days.

Overall FICO scores increased slightly for the fourth consecutive month to 724. LTV remained at 79 and front and back DTI's averaged 26/39.

Ellie Mae calculates the pull through or closing rate for loans based on a sample of applications submitted 90 days prior, in this case February 2018.  It found closing rates for all loans increased to 70.2 percent from 69.5 percent in April. The rate for refinances rose to 65.0 percent from 64.8 percent while purchase rates were at 75.0 percent compared to 73.9 percent in April.

"The start to the summer home buying season is in full swing and while inventories remain tight, we're seeing an increasing percentage of purchase loans," said Jonathan Corr, president and CEO of Ellie Mae. "Even with the shift to a strong purchase market, closing times have remained steady, hovering around 41 days, and closing rates have increased slightly to just over 70 percent as more lenders take advantage of digital mortgage solutions to drive efficiencies and improve consumer experience."

Ellie Mae mines data from a sample of approximately 80 percent of all mortgage applications that were initiated on its mortgage management system.  The company states its Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.