Purchase Originations Picking Up Despite Lower Rates

The balancernbetween loans originated for purchase and for refinancing shifted furtherrntoward the purchase side in May according to the Ellie Mae Origination Insight Report.  Thern33 percent/66 percent split were new low and high marks for Ellie Mae whichrnbegan reporting data in 2011.  Refinancernand purchase originations had respective shares of 37 and 63 percent in Aprilrnand 58 and 42 percent in May 2013.</p

If we consider other recent reports agree that all-cash purchases have also been increasing, an even more pronounced increase in overall purchase share is implied (because this report is derived from data in Ellie Mae’s LOAN origination software).</p

The gaprnwas even wider for loans originated for FHA; only 19 percent of those loansrnwere for refinancing while 81 percent were purchase mortgages.  Conventional loans split 40 and 59 percent.</p

Twenty-twornpercent of all originations were FHA loan and 64 percent werernconventional.  Both percentages werernunchanged from April and the FHA shares has remained the same for four straightrnmonths.  Nine percent of loans were backedrnby the VA and 5 percent were classified as “other.”</p

Thernprofile of a closed loan remained largely unchanged from April and has variedrnlittle all year.  The average FICO scorernwas up one point from the previous month to 727 while the loan-to-value andrndebt-to-income rations were unchanged at 81 percent and 24/37 respectively.</p

It tookrnan average of 40 days to close a loan in May and that timing was essentiallyrnthe same regardless of the loan purpose or for whom it was originated.  The average for all of 2013 was 45 days.</p

To get arnmeaningful view of lender “pull-through,” Ellie Mae reviewed a sampling of loanrnapplications initiated 90 days prior (i.e., the February 2014 applications) torncalculate an overall closing rate of 57.8% in May compared to 55.0 inrnApril.  There was a substantialrndifference in the pull-through rate for refinancing, 52.3 percent, compared tornpurchase loans at 61.6 percent.  Bothrnrates were higher than in April when pull-through was 49.6 percent and 58.8rnpercent </p

ElliernMae’s report comes from a sample of application data that runs through itsrnmortgage management system which handled approximately 3.5 million applicationsrnin 2013. 

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