New data released by Ellie Mae reveals that refinances constituted 45% of the total loan activity in September, an increase from August’s 43%. Meanwhile, purchase loans took the remaining 54% of September’s total mortgage originations, a decrease from August’s 56%, Ellie Mae’s September Origination Insight Report read.
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“Refinance activity continued into September, representing 45 percent of closed loans in the month,” Jonathan Corr, Ellie Mae president and CEO, said in an Oct. 19 public statement. “We believe that given the volume of refinances during the month, it is not surprising that the average time to close would increase slightly from the month prior.”
Closing Time, Rates
In September, all loans had an average time-to-close of 48 days, an increase from 46 days recorded in August. By time-to-close it means the period from loan application to funding.
The Ellie Mae report also noted the average time it took for a specific loan type to close in September vis-a-vis August:
- It took 47 days to close a purchase loan and 50 days to close a refinance loan in September, which is the longest time recorded since August last year.
- It took 49 days to close an FHA loan in September, from 48 days in August, and 51 days to close an FHA refinance loan.
- It took 51 days to close a VA loan in September.
- The average time it took to close an FHA loan for purchase rose to 48 days.
Mr. Corr pointed out, “While all loans increased from 46 days in August to 48 days in September, the average time to close a refinance increased to 50 days, which is the most we’ve seen in over a year.”
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Moreover, closing rates on all loans dropped in September to 71.8% from 72.3% in August. Refinancing closing rates decreased in September to 66.4%, from 67.1% in August. Purchase closing rates remained at 76.4%.
Borrower Profiles
The Ellie Mae report, which is based on anonymized data from its Encompass® platform, revealed that the average FICO score on all closed loans for the month of September remained at 731.
In September, the average loan-to-value ratio is 78%, compared to August’s 79%.
Debt-to-income ratio remained at 24/37 in September.
With respect to borrower profiles of closed FHA loans:
- For FHA refinance loans, the average FICO score dropped to 654 in September from 658 in August. LTV ratio remained constant at 79% and DTI ratio increased slightly to 28/45 in September compared to 28/44 in August.
- For FHA purchase loans, the average FICO score dropped slightly to 686 in September, compared to August’s 687. For the past nine months, LTV stuck at 96% and DTI also remained at August levels of 27/42.
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For closed VA loans, the borrower profiles are:
- For VA refinance loans, the average FICO score is 712 in September, same as in August. LTV ratio decreased slightly to 87% in September from the previous month’s 88%. DTI also increased slightly to 24/40.
- For VA purchase loans, the average FICO score remained steady at 708, LTV 98% and DTI 24/40 during the month of September.
Meanwhile, the borrowers of closed conventional loans are profiled as follows:
- For conventional refinance loans, the average FICO score held steady at 747, LTV ratio at 67%, and DTI ratio at 24/36 for the month of September.
- For conventional purchase loans, the average FICO score also remained at 754, LTV ratio at 80%, and DTI ratio at 23/34.
Ellie Mae (NYSE: ELLI) provides software solutions and services to the U.S. residential mortgage industry. Its Origination Insight Report is based on a sampling of 75% of mortgage applications that passed through its Encompass® software for residential mortgages.
