Mortgages have been infamous for their documentary requirements and processing time. But for two months in a row, Ellie Mae reported a decline in the number of days to close a mortgage. Its Origination Insight Report for the month of April also disclosed the overwhelming share of purchase loans in the residential mortgage market and other mortgage-related trends.
Mortgage Closing Time
In April, mortgage lenders took 42 days on an average to close all mortgage loans, a day’s decrease from March’s 43 days and almost 10 days from January’s 51 days, which is considered a record high in 2017.
The average time for purchase and refinance loans to each close in April was 42 days and 41 days respectively, a drop from 43 days for both loan types in March.
Moreover, the percentage of loan applications that closed increased from 67.9% in March to 69.4% in April. If broken down, the closing rate on each of purchase and refinance loans however dropped to 74.5% and 63.5% respectively in April.
Profiling Borrowers With Closed Loans
Meanwhile, Ellie Mae profiled the borrowers whose loans closed in April and this is the result:
- The average FICO score of borrowers was 722.
- The average loan-to-value ratio was 80%.
- The average debt-to-income ratio was 25%/39%.
Purchase Mortgages Rule the Market
Home purchase loans dominated the residential mortgage market, representing 65% of all loans that closed in April. The April percentage share was higher than in March (63%), from six months ago (53%) and from a year ago (59%).
The remaining share of the total monthly originations (35%) was taken by refinance loans, a decline from 37% in March 2017, 47% in October 2016 and 40% in April 2016.
In April, 63% of all loans originated were conventional loans followed by FHA loans with 23% and VA loans with 10%. The remaining four percent was occupied by other loan types. The percentage share for the above loan types was pretty much the same as in the prior month surveyed.
On an average, the 30-year fixed-rate mortgage continued to climb to 4.41% in April, up from March’s average rate of 4.39%.
Interestingly, it was in April that the highest percentage of adjustable-rate mortgages was originated since November 2014, reaching 5.9% compared to 5.6% in March.
Ellie Mae, a mortgage on-demand software solutions provider, compiles information on mortgage loans during a certain month on its Origination Insight Report. To prepare this report, Ellie Mae reviews a sample of loan applications with a 90-day cycle because according to it, most loan applications take a month or so to close.