August Loan Closing Rate Highest of Year

The share of loans originated for refinancing rose in August for the first time this year.  Ellie Mae's Origination Insight Report shows that closed transactions for refinancing represented 32 percent of the total, up 3 percentage points from July. The 3-point increase was consistent across all loan types.  The refinancing share was 45 percent at the first of the year.

The distribution of loans across loan types has been unchanged since May.  Conventional loans have a 66 percent share, FHA loans 20 percent, and VA loans 10 percent.

The average closing time for all loans was 43 days for the second straight month. The time for purchase loans to close, however ticked up 1 day to 45 days while the timeline for refinance loans dropped 3 days to 38.

The average FICO score for closed loans dipped one point to 724 and the average loan to value ratio was also one point lower at 79 percent. 71 percent of all closed loans had FICO scores over 700.  This includes 72 percent of purchase loans and 64 percent of refinances.

Closing or pull-through rates for all loans increased to 71.7 percent in August from 70.9 percent in July.  This was the best closing rate thus far in 2018.  Closing rates for refinance loans dropped slightly to 63.5 percent from 63.7 percent in July while purchase closing rates increased from 75.0 percent to 75.9 percent. 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 Loans that do not close could still be active applications or applications withdrawn by consumers for incompleteness or non-qualification. The August closing rate is based on applications submitted in May.

The Origination Insight Report mines its application data from a sampling of approximately 80 percent of all mortgage applications that are initiated through Ellie Mae's Encompass digital mortgage solution.