Purchase Applications Hit 10 Month High

by devteam May 16th, 2013 | Share

The percentage of loansrnoriginated for purchasing homes increased again in April, the third consecutivernmonth they have done so.  According ElliernMae’s Origination Insight Report for April, thosernloans made up 42 percent of the total originations during the monthrncompared to 38 percent in March and 27 percent in January.  It was the largest market share since Julyrn2012 when purchase mortgages also made up 42 percent of the total.  The average interest rate on a 30 yearrnfixed-rate mortgage in April was 3.808 compared to 3.908 for all loans closedrnin 2012. </p

FHA loans made up 22rnpercent of originations and Conventional loans 68 percent compared to 21rnpercent and 70 percent respectively in March. rnFifteen-year mortgages made up 15.3 percent of all mortgages andrnadjustable rate mortgages had a 3.2 percent share, the highest since lastrnJuly.  Ellie Mae’s report draws its datarnfrom the three million originations that are handled by its mortgage managementrnsoftware and network, more than 20 percent of the U.S. total.</p

Loans took an average of 46 daysrnto close, 47 days for refinances and 44 for purchases.  This timeline has ebbed and flowed over thernlast year but 46 days is the lowest overall average closing time since lastrnsummer.</p

“The spring buyingrnseason appeared to be in full bloom in April with the percentage of closedrnpurchase loans reaching 42% last month, up from 38% in March 2013 and 32% inrnFebruary 2013,” said Jonathan Corr, president and chief operatingrnofficer of Ellie Mae.  The last timernpurchase loans broke the 40% mark was back in July 2012.</p

To get a meaningful view of<blender "pull-through," Ellie Mae reviewed a sampling of loan applicationsrninitiated 90 days prior (i.e., the January 2013 applications) to calculate anrnoverall closing rate of 53.2% in April 2013, down from 55.1% in March 2013.  Closed first lienrnloans of all types had an average FICO Score of 742 and a loan to value ratiornof 81 percent.  The debt-to-income ratiornwas 23/35.  </p

“The trend towardrnmore relaxed credit also continued in April 2013 as the average FICO scorerndecreased slightly for the fifth consecutive month to 742 in April 2013 fromrn743 in March 2013,” added Corr. He said the slight decline in pullthrough ratesrnfrom 55.1 in March may be a reaction to the higher interest rates in April. </p

There were some signsrnthat that HARP 2.0 may be slowing down: rnConventional refinances at 95%-plus LTV dropped for the first time sincernAugust 2012, falling to 11.6% in April 2013 from 13% in March 2013,” Corr said.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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