Averages in 2014: LTV, FICO, Loan Types, and More

Fifty-six percent of loans closed inrnDecember were for home purchase, somewhat lower than the average for 2014 as a wholernaccording to the Origination InsightsrnReport from Ellie Mae.  Lowerrninterest rates pushed refinancing numbers higher toward the end of the year,rnincreasing originations for that purpose from the years low of 32 percent inrnJuly to 45 percent in November but the refinancing shared dipped to 43 percentrnin December, allowing the reciprocal share of purchase mortgages to increasernfor the first time in four months. </p

For the entire year purchase loans hadrna 61 percent share of all originations and refinance loans were 38 percent ofrnthe total.  In 2013 refinancingrnconstituted 53 percent of all loans and purchases 47 percent.  There was a big difference, however, in thernstatistics for FHA loans and conventional loans.  Conventional loans were fairly evenly splitrnas to purpose; 47 percent for refinancing, 52 percent for purchase.  Eighty one percent of FHA backed originationsrnin 2014 were purchase loans. </p

Sixty-seven percent of originations inrnDecember were conventional loans.  Thernshare of loans originated for FHA during the month was the smallest of thernentire year, 17 percent.  Eleven percentrnof originations were VA loans.  </p

Borrower characteristics for loans thatrnclosed changed little over the year.  Thernaverage FICO score for the year was lower than in 2013, 726 vs. 738, and thernaverage loan-to-value ratio, 81, was one percentage point higher than a yearrnearlier but Ellie Mae called credit requirements steady year-over-year.  In December of both 2013 and 2014 31 percentrnof closed loans had an average credit score under 700. </p

To get a meaningful view of lenderrnpull-through, Ellie Mae reviewed a sampling of loan applications initiated 90rndays prior-or the September 2014 applications-to calculate an overall closingrnrate of 60.2 percent in December 2014. rnThe closing rates for purchase loans in December was 67.1 percent, thernhighest level since Ellie Mae because tracking the data in August 2011.  The closing rate for refinances was 51.2rnpercent.</p

“While many observers thought rates wouldrnrise last year, lenders were instead treated to at least a little morernrefinancing volume,” said Jonathan Corr, president and COO of Ellie Mae. “Thernfact that lenders are closing purchase loans at a higher rate is great news asrnwe head toward the spring home buying season.” </p

The average time to close all loans inrnDecember was 42 days.  Processing timernwas virtually identical regardless of loan type or purpose. </p

Ellie Mae’s Origination InsightrnReport mines its data from a large sampling of the 3.7 million mortgagernapplications that were initiated on its loan origination platform in 2014.  Ellie Mae says its report focuses on loansrnthat closed or were denied in a specific month and compares theirrncharacteristics to similar loans that closed or were denied three and sixrnmonths earlier. The closing rate is calculated on a 90-day cycle so loans thatrndo not close could still be active applications or applications withdrawn byrnconsumers or denied for incompleteness or non-qualification.

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