Ellie Mae said today that loans for refinancing represented only 47 percent of loans originated in July, dropping from 51 percent in June and representing less than half of all loans for the first time since the company began reporting the data in August 2011.   Refinancing had a 62 percent average market share for all of 2012 while purchase loans, which rose to 53 percent from 49 percent in July averaged 38 percent for 2012.

Jonathan Corr, Ellie Mae's president and chief operating officer noted the decline in refinancing but said the increase in purchase loans is a further indication that housing is improving.   "One part of the refinance market, HARP-related high LTV refinances (95% or more), had a resurgence, rising more than three percent to 11.1% in July 2013, compared to 8.0% in June 2013," he noted.

FHA-backed loans held steady at 19 percent of originations for the third straight month while conventional mortgages were at 71 percent for the second month.  FHA loans averaged 23 percent of all originations in 2012 and had as high as a 28 percent share in March and April 2012.

The average time to close a loan in July was 47 days with loans for refinancing taking an average of 48 days, two more than the average loan for a home purchase. 

To get a meaningful view of lender "pull-through," Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the April 2013 applications) to calculate an overall closing rate of 55.4% in July 2013, up from 54.3% in June 2013.   

Seventy-five percent of closed loans had an average FICO score over 700 compared to 83 percent of loans a year ago.  The average debt-to-income ratio rose from an average of 23/34 for all of 2012 to 24/36 in July and the loan-to-value ratio is up two percentage points from the beginning of the year.

"Credit standards continued to ease in July," said Corr. "The average FICO score fell to 737, from 742 in June 2013, and it is now at the lowest level since we began our tracking in August 2011. Similarly we saw slight increases in both loan-to-value and debt-to-income ratios last month-signs that lenders are willing to accept slightly more risk to maintain volume.

Ellie Mae mines its data from a sampling of approximately 44 percent of loans initiated on its proprietary origination platform.  Those loans represent about 20 percent of all U.S. loan applications.