Fifty-six percent of loans closed in December were for home purchase, somewhat lower than the average for 2014 as a whole according to the Origination Insights Report from Ellie Mae.  Lower interest rates pushed refinancing numbers higher toward the end of the year, increasing originations for that purpose from the years low of 32 percent in July to 45 percent in November but the refinancing shared dipped to 43 percent in December, allowing the reciprocal share of purchase mortgages to increase for the first time in four months.

For the entire year purchase loans had a 61 percent share of all originations and refinance loans were 38 percent of the total.  In 2013 refinancing constituted 53 percent of all loans and purchases 47 percent.  There was a big difference, however, in the statistics for FHA loans and conventional loans.  Conventional loans were fairly evenly split as to purpose; 47 percent for refinancing, 52 percent for purchase.  Eighty one percent of FHA backed originations in 2014 were purchase loans.

Sixty-seven percent of originations in December were conventional loans.  The share of loans originated for FHA during the month was the smallest of the entire year, 17 percent.  Eleven percent of originations were VA loans. 

Borrower characteristics for loans that closed changed little over the year.  The average FICO score for the year was lower than in 2013, 726 vs. 738, and the average loan-to-value ratio, 81, was one percentage point higher than a year earlier but Ellie Mae called credit requirements steady year-over-year.  In December of both 2013 and 2014 31 percent of closed loans had an average credit score under 700.

To get a meaningful view of lender pull-through, Ellie Mae reviewed a sampling of loan applications initiated 90 days prior-or the September 2014 applications-to calculate an overall closing rate of 60.2 percent in December 2014.  The closing rates for purchase loans in December was 67.1 percent, the highest level since Ellie Mae because tracking the data in August 2011.  The closing rate for refinances was 51.2 percent.

"While many observers thought rates would rise last year, lenders were instead treated to at least a little more refinancing volume," said Jonathan Corr, president and COO of Ellie Mae. "The fact that lenders are closing purchase loans at a higher rate is great news as we head toward the spring home buying season."

The average time to close all loans in December was 42 days.  Processing time was virtually identical regardless of loan type or purpose.

Ellie Mae's Origination Insight Report mines its data from a large sampling of the 3.7 million mortgage applications that were initiated on its loan origination platform in 2014.  Ellie Mae says its report focuses on loans that closed or were denied in a specific month and compares their characteristics to similar loans that closed or were denied three and six months earlier. The closing rate is calculated on a 90-day cycle so loans that do not close could still be active applications or applications withdrawn by consumers or denied for incompleteness or non-qualification.