The interest rates on 30-year fixed rate mortgages originated in December reached an all-time low in ICE Mortgage Technology's (formerly Ellie Mae's) records, an average of 2.93 percent and a 4-basis point decline from the November rate. The company, in its monthly Origination Insight Report, said the note rate for all three loan types it tracks, FHA, Conventional, and VA, were all below 3.0 percent for the second straight month. FHA and Conventional loans dropped to 2.94 and 2.96 percent, respectively. Each averaged 2.99 percent the prior month. The VA rate fell from 2.72 to 2.66 percent.
Refinances continued to dominate at 60 percent of originations, down 1 percentage point from November but up from 46 percent a year earlier. The outsized share was skewed toward conventional loans at 68 percent. Purchase loans accounted for 81 percent of FHA originations and 70 percent of VA loans.
"Interest rates continued to decline at the end of 2020, driving the growing share of refinances for another month," said Joe Tyrrell, president of ICE Mortgage Technology. "Despite the continued impact of the coronavirus, our lenders are leveraging technology and digital solutions to manage borrower demand for refinances, while taking into account the health and safety of all people as part of the mortgage origination process."
Conventional loans accounted for 81 percent of loans originated during the month, down 1 point from November. Ten percent of loans were FHA and 6 percent were VA, unchanged from their shares the prior month. Other loan types ticked up from 2 to a 3 percent share.
The time to close all loans increased to 58 days from 55 days in November with purchase loans, at 56 days compared to 49 days, accounting for all the increase. The refinance timeline remained at 59 days.
The closing rate for all loans was 76.5 percent, about a point higher than in November. ICE computes the closing rate from a review of a sample of loan applications initiated 90 days prior, in this case the September 2020 applications.
The Origination Insight Report's data comes from a sampling of approximately 80 percent of all mortgage applications that were initiated on the ICE proprietary lending platform. The company says its report is a strong proxy of the underwriting standards employed by lenders across the country.