Purchase Originations Overtake Refinances -Ellie Mae

Ellie Mae said today that loans for refinancingrnrepresented only 47 percent of loans originated in July, dropping from 51rnpercent in June and representing less than half of all loans for the first timernsince the company began reporting the data in August 2011.   Refinancing had a 62 percent average marketrnshare for all of 2012 while purchase loans, which rose to 53 percent from 49rnpercent in July averaged 38 percent for 2012.</p

JonathanrnCorr, Ellie Mae’s president and chief operating officer noted the decline inrnrefinancing but said the increase in purchase loans is a further indicationrnthat housing is improving.   “Onernpart of the refinance market, HARP-related high LTV refinances (95% or more),rnhad a resurgence, rising more than three percent to 11.1% in July 2013, comparedrnto 8.0% in June 2013,” he noted. </p

FHA-backed loans held steady at 19 percent ofrnoriginations for the third straight month while conventional mortgages were atrn71 percent for the second month.  FHArnloans averaged 23 percent of all originations in 2012 and had as high as a 28rnpercent share in March and April 2012.</p

The average time to close a loan in July was 47 daysrnwith loans for refinancing taking an average of 48 days, two more than thernaverage loan for a home purchase.  </p

To get a meaningful view of lenderrn”pull-through,” Ellie Mae reviewed a sampling of loan applications initiated 90rndays prior (i.e., the April 2013 applications) to calculate an overall closingrnrate of 55.4% in July 2013, up from 54.3% in June 2013.   </p

Seventy-five percent of closed loansrnhad an average FICO score over 700 compared to 83 percent of loans a yearrnago.  The average debt-to-income ratiornrose from an average of 23/34 for all of 2012 to 24/36 in July and the loan-to-valuernratio is up two percentage points from the beginning of the year.</p

“Credit standards continued to easernin July,” said Corr. “The average FICO score fell to 737, from 742 in Junern2013, and it is now at the lowest level since we began our tracking in Augustrn2011. Similarly we saw slight increases in both loan-to-value andrndebt-to-income ratios last month-signs that lenders are willing to acceptrnslightly more risk to maintain volume.</p

Ellie Maernmines its data from a sampling of approximately 44 percent of loans initiatedrnon its proprietary origination platform. rnThose loans represent about 20 percent of all U.S. loan applications. 

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