Ellie Mae says its October data on closed and denied loans indicate that credit is loosening.  The company said that average FICO scores continued to decline and the debt-to-income ratios have eased "materially."  

Ellie Mae's latest Origination Insight Report shows the average FICO score on all closed loans was 722, down 1 point from September and 9 from the first of the year.  It was the fifth consecutive month that scores have declined and the lowest level since the company started reporting data in August 2011. Additionally, the average FHA refinance FICO score fell 7 points to 654 while the average VA purchase loan FICO score declined to 705, its lowest point since April.

The front-end and back-end debt-to-income (DTI) ratios averaged 25/39, the highest percentages since January 2014. The DTI started the year at 24/37.

Refinancing increased slightly to 44 percent of closed loans from 42 percent in September.  Sixty-four percent of all loans were conventional, 23 percent were FHA and 9 percent were VA - all unchanged from the previous month.

Closing rates, derived by reviewing a sample of loan applications initiated 90 days earlier, remained robust at 66.8 percent, the fourth consecutive month the rate exceeded 66 percent. The closing rate on purchase loans remained steady at 71 percent.

"It is still too early to see if there will be impacts stemming from the Know Before You Owe changes that went into effect just last month," said Jonathan Corr, president and CEO of Ellie Mae. "The time to close loans remained a constant 46 days for yet another month, while the closing rate on purchased loans has stayed above 70 percent. We may begin to see time to close increase in the November data as the new closing disclosures are utilized for the first time."

The Origination Insight Report mines its application data from a sample of approximately 66 percent of all mortgage applications that were initiated on the Encompass® all-in-one mortgage management solution.