November 20th, 2013 9:55 PM by Jackie A. Graves, President
Mortgage loan originations for the purpose of purchasing topped 60 percent in October Ellie Mae said on Wednesday, for the first time since the company began publishing itsOrigination Insight Report. Quite naturally the refinancing share was below 40 percent for the first time as well.
Purchase mortgages represented 61 percent of all mortgages originated during the month compared to 58 percent in September and 31 percent in October 2012. Refinancing dropped to 39 percent from 41 percent the previous month and 68 percent a year earlier. Ellie Mae first began tracking this data in August 2011.
Sixty-eight percent of originations were conventional mortgages, down from 70 percent in September and 74 percent in October 2011 while FHA-backed mortgages remained at the 19 percent level where it has been for five of the last six months and where is stood in October 2012 as well.
The time to close a loan rose slightly for all mortgages, from 42 days in September to 45 days in October. The time to close was up 3 percentage points for both purchase and refinance mortgages which increased to 46 and 43 days respectively.
The pull-through rate, that is the percentage of applications which close as loans, fell slightly from 52.3 percent in September to 51.4 percent in October. The closing rate for purchase loans was 56.9 percent, down from 59.6 percent and for refis it was 44.6 percent compared to 45.2 percent.
Underwriting standards seem to be easing. Ellie Mae said that 28 percent of closed loans had an average FICO score of less than 700 compared to 16 percent one year earlier. The average loan-to-value ratio (LTV) has increased to 81 percent from 78 percent in October 2012 while the average FICO score is down to 732 from 750. The debt-to-income ratio is now at 25/38 instead of 23/34.
Ellie Mae draws its data from a sampling of loan applications that flow thought its proprietary software and loan network. That volume represents more than 20 percent of all U.S. loan originations.