Purchases Continue Taking Market Share; FICOs Trending Lower

Ellie Mae’s Origination Insight Report said today that 40 percent of mortgagernloans closed in March were originated for refinancing and 60 percent for homernpurchases.  In February the split wasrn43/57 percent.  The March figure was the<blowest share for refinancing since Ellie Mae began reporting the data in latern2012.  Ellie Mae gathers data from arnsample representing the approximately 57 percent of all mortgage applicationsrnthat pass through its management software and systems.  </p

Jonathan Corr, president and COO ofrnEllie Mae said, “We continue to see the resurgence of a purchase-centric marketrnas numbers inch closer to historical levels. rnPurchases increased another three percentage points in March 2014 tornrepresent 60 percent of loans, quite the difference from March 2013 whenrnpurchases represented only 38 percent of loans.”</p

Conventional loans had a 65 percentrnmarket share and 22 percent were FHA-backed, unchanged from the previousrnmonth.  The FHA share was identical tornthat in April 2013 but the convention loan share was down 3 percentage points.</p

While average FICO scores rose one pointrnin March, Ellie Mae’s figures indicate that overall there has been a trendrntoward loosening of that standard.  Therernhas, however been little change in other underwriting guidelines.  The average FICO score for a closed loan inrnMarch was 725 compared to 724 in January and February, however the average FICOrnscore for all of 2013 was 738.  Therncompany said that one-third of closed loans had an average score under 700rncompared to 27 percent one year ago.  Thernaverage FICO score for a denied loan application was 689 in March compared tornan average of 699 in 2013.</p

The greatest dip in FICO scores were forrnFHA refinances where the average for March was 672 compared to 698 for all ofrn2013.  FHA purchase scores were down 11rnpoints to 684.  The average score for arnconventional refinance was 732 compared to 747 while conventional purchasernloans averaged only 4 points below the 2013 average of 759.</p

Corr said the increase in the averagernFICO score was the first in 2014.  “Thernaverage debt-to-income ratio also tightened on both the front and backend,rnfalling to 24/37.”  The previous monthrnthe DTI was 25/38.  The averagernloan-to-value ratio for last month was 82, unchanged from the previous twornmonths but 1 percentage point higher than all of 2013.  </p

It took an average of 40 days to close arnloan in March, down from 41 days in February and 46 days in April 2013.  Loans for refinancing took an average of 37rndays, 10 days less than a year earlier, and purchase loans an average of 41rndays compared to 44 days.</p

To arrive at a lender “pull-through”rnnumber Ellie Mae reviewed a sampling of loan applications initiated 90 daysrnearlier (i.e. December 2013) to calculate an overall closing rate of 58 percentrnin March, up from 55.3 percent in February 2014 and 53.2 percent in Marchrn2013.  The closing rate for refinancesrnwas 54.6 percent compared to 47.0 percent in February and was 60.7 percent forrnpurchase mortgages, down from 62.0 percent.

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