There has been a significant reduction mortgage processing times since the first of the year according to ICE Mortgage Technology. Its Origination Insight Report says that the time to close a purchase mortgage, which averaged 57 days in January declined to 53 days in February then to 51 days in March. Refinancing has seen similar improvement, falling from 59 days in January to 52 days in each of the subsequent months. The time to close for all loans was also 51 days, 6 fewer than in January.
"We're seeing a compelling reduction in the time to close a mortgage as we continue into 2021," said Joe Tyrrell, president of ICE Mortgage Technology. "Part of the reason is lenders are continuing to adopt digital mortgage tools to improve their loan origination process and serve homebuyers more efficiently for example eClose, which makes for a more streamlined process that saves time, and that shift is showing up in the data."
The percentage of refinances dropped from 68 percent of all closed loans in February to 63 percent in March, so the share of purchase mortgages ticked up accordingly. They accounted for 36 percent of total closed loans for the month of March compared to 32 percent in February.
"After months of near record numbers of refinances, it is clear that the pandemic has shifted how people view their homes and in doing so, prompted homeowners to refinance, often in order to access the equity," said Tyrrell. "As we enter the summer home buying months, if we continue to see higher than normal refinance volumes, as some homeowners commit to staying in their current homes, it will mean new buyers face an even more competitive purchase market driven by tight supply."
Eighty-three percent of all originations in March were conventional loans, down 1 point from the previous month and FHA loans ticked up 1 point to 9 percent. VA loans had only a 3 percent share, down from 5 percent in both January and February.
Closing rates increased slightly for the month on all loans, increasing from 76.4 percent in February to 77.9 percent in March. Closing rates on refinances improved from 76.3 percent to 78.0 percent month-over-month. Closing rates on purchases grew from 77.1 to 78.1 percent, respectively. ICE's closing rates are based on a review of a sample of applications submitted 90 days prior, in this case, in December 2020.
The Origination Insight Report uses data from a sampling of approximately 80 percent of all mortgage applications that were initiated on the company's lending platform. ICE says the report is a strong proxy of the underwriting standards employed by lenders across the country.