Technology Continues to Reduce Closing Times

The share of refinances originated during a month dropped below 60 percent in April for the first time since September 2020. ICE Mortgage Technology, in its Origination Insight Report for the month, put the share at 56 percent, down from 63 percent the following month. The corresponding increase in purchase loans, 43 percent, was the highest since last August.

The report also notes a further decline in the average time to close all loans to 51 days. It was the fourth consecutive decrease since January when closing time averaged 58 days. The 1 day decline was due to a 2 day shortening of the purchase loan timeline to 49 days, offset by refinancing time which ticked up 1 day to 52.

"The decrease in average time to close is not surprising, given the increase we have observed in the adoption of digital transformation tools, such as our artificial intelligence offering and consumer engagement suite," said Joe Tyrrell, president of ICE Mortgage Technology. "This trend also aligns with findings from our [recent survey] in which both borrowers and lenders noted that digital mortgage technologies are making it faster and easier to close a mortgage loan, thus improving the overall experience for participants." 

Conventional loans represented 81 percent of the month's originations, down 2 percentage points from March. The share of VA loans increased 3 points and FHA loans 1 point to 6 percent and 10 percent, respectively.

The closing rate for all loans increased fractionally to 78 percent. Closing rates on refinances increased to 78.8 percent from 78.0 percent while the pull through on purchase loans fell to 76.7 percent from March's 78.1 percent. ICE computes the closing or pull-through rate from a sample of loan applications initiated 90 days prior, in this case in January 2021.

Data in the Origination Insight Report is derived from a sampling of approximately 80 percent of all mortgage applications that were initiated the ICE lending platform. The company views the information as a proxy for the underwriting standards employed by lenders across the country.