The interest rate for loans originated (closed) in October inched down 1 percentage point to 4.20 percent, the lowest rate thus far in 2017, and the sixth month in a row rates have declined. Ellie Mae also reported that the share of originations that were for refinancing moved up one percentage point to the highest share since February.
"We are continuing to see borrowers take advantage of the lower interest rates as the refinance percentage increased to 39 percent of total loans in the month," said Jonathan Corr, president and CEO of Ellie Mae. "We saw increases in October across all loan types with FHA refinances at 23 percent, conventional refinances at 46 percent and VA refinances at 32 percent of all closed loans."
According to the company's Origination Insight Report, the distribution of all loans originated in October remained steady at 66 percent conventional, 20 percent FHA, and 10 percent VA. The share of VA loans hasn't budged since January.
Closing time for all loans stayed at 43 days while closing time for refinance loans was unchanged at 40 days, tying with September for the shortest timeline since February 2015.
The average FICO score on closed loans was unchanged at 724. The average loan-to-value ratio was 79 percent.
Closing rates deteriorated for both refinancing and purchase loans and across all loan types. For all loans the rate declined from 71.6 percent to 70.4 percent. Ellie Mae calculates closing rates from a sampling of loan applications initiated 90 days earlier, in this case in July.
The Origination Insight Report mines data from a sample of approximately 80 percent of all mortgage applications that were initiated on the Ellie Mae's mortgage management solution. The company says its Report is a strong proxy of the underwriting standards employed by lenders across the country.