Originations are increasingly tilted toward home purchase mortgages per the latest Origination Insight Report from Ellie Mae. The May data show the share of those mortgages gained another three percentage points to represent 68 percent of all closed loans. The share of refinance originations has dropped from 47 percent at the beginning of 2017 to a current level of 32 percent. The purchase share of Convention loans increased from 57 percent to 61 percent and the purchase share of FHA ticked up 1 point to 82 percent and VA's to 73 percent from 71.
The average 30-year note rate of closed loans was down for the first time this year, to 4.33 percent from 4.41 percent in April, but that average rate was still 27 basis points higher than in May 2016. The percentage of Adjustable Rate Mortgage (ARM) originations among Conventional loans continued its rise, ticking up to 7.5 percent in May, from 7.3 percent in April and 5.5 percent the previous May. ARMs remain a miniscule part of FHA and VA lending - less than one-half percent each.
The composition of loan types has been unchanged for the last four months. Sixty-three percent of originations have been Conventional, 23 percent FHA, and 10 percent VA.
The closing rate for all loans improved by 1 percentage point to 70.4 percent; all of the increase was from purchase loans. The increase in closing rate held across all lenders. The average FICO score of closed loans was 723 and the loan to value ratio averaged 80 percent.
The time to close loans was the same as in April. Refinance loans took an average of 41 days, purchase loans 42 days; an average of 42 days overall.
"The start of the peak summer homebuying period combined with fewer refinances due to higher interest rates, drove purchases to the largest percentage of total loans since we began tracking data in 2011. Home loan purchases represented 68 percent of total closed loans, a 3 percent increase from the prior month," said Jonathan Corr, president and CEO of Ellie Mae.
The Origination Insight Report mines its application data from large sample of approximately 80 percent of all mortgage applications that were initiated on its mortgage management system. The company calculates the closing rate from a sample of loan applications submitted 90 days earlier, in this case in February.