The share of refinancing relative to all mortgage originations increased
sharply in January, rising from 69 percent the previous month to 73 percent
while purchase applications hit an historic low. The information comes from Ellie Mae's Origination
Insight Report and is compiled from the approximately 3 million loan originations
utilizing its software and origination management systems.
The refinancing share
of closed loans in January was the highest since Ellie Mae began producing its
report in August 2011, an increase of 4 percentage points from December. Purchase applications had a 27 percent market
share, down from 31 percent in December and the lowest in Ellie Mae's reporting
history. Purchase applications averaged
a 38 percent share in 2012.
FHA loans continued a
gradual decent in market share as its counter-cyclical role in the economy continued
to decrease. In August 2011, the first
month for which Ellie Mae provides data, FHA closed 29 percent of mortgage
loans and it averaged a 23 percent share through 2012. In January the market share was 18 percent,
down from 19 percent in December and 25 percent one year earlier.
constituted 74 percent of the market, up from 73 percent in December and 67
percent in January 2012. The average for
2012 was 69 percent.
The time required to
close a refinancing loan dropped from 57 days in December to 55 days in January
but remained unchanged at 51 for home purchase loans. Refinancing took an average of 49 days in
2008 and purchasing 46 days.
To get a meaningful view of
lender "pull-through," Ellie Mae reviewed a sampling of loan applications
initiated 90 days prior to calculate an overall closing rate of 55.0% in
January 2013, up slightly from 54.7% in December 2012. Ellie Mae attributed this to an increase in
"Since last summer,
the refinance share has been climbing steadily and in January 2013 it reached
73%, the highest level since we began tracking this data in August 2011," said
Jonathan Corr, president and chief operating officer of Ellie Mae. "Continued
low interest rates and home-buying seasonality are big reasons for this shift,
but so is HARP 2.0 activity. Closed conventional refinances with LTVs of
95%-plus ticked up slightly to 11.6% in January 2013 from the previous high of
11.4% in December 2012, indicating that more underwater borrowers are being
able to refinance thanks to HARP2.0.
"The share of FHA
loans versus conventional loans declined to 18% in January 2013, which has been
a new low since our tracking began." Corr continued, "This may indicate that
higher premiums and other program changes are making FHA loans less
Corr also added,
"Average credit scores for conventional loans in January 2013 were slightly
lower compared to the same time last year.
A year ago, the average credit score was 769 for a conventional
refinance and 763 for a similar purchase. In January 2013, those averages
dropped to 763 for refinances and 760 for purchases. While the overall credit
score requirement remains tight, it appears that we are beginning to see some