A bigger share of borrowers who closed on their home loans last month were refinancing an existing mortgage than the preceding month. Closing rates climbed to a 12-month high.
Two-thirds of all single-family loans that were closed during August were conventional mortgages. Conventional share has widened from the same month last year, when it was 64 percent.
On the other side of the year-over-year gain were loans insured by the Federal Housing Administration, with the share retreating to a fifth from 22 percent in August 2017.
A 10th of last month’s volume was loans guaranteed by the Department of Veterans Affairs, the same share as a year earlier.
Ellie Mae Inc. revealed the details, along with many other monthly metrics in its August 2018 Origination Insight Report.
August 2018’s closing rate was 71.7 percent, better than 70.9 percent a month prior, the highest ratio during the last 12 months and unchanged from the same month in 2017.
The closing rate reflects the share of applications started in the prior 90-day cycle that have converted to a closed transaction. The rate was 63.5 percent on refinances and 75.9 percent on purchases.
On conventional mortgages the closing rate was 72.4 percent, while it was 68.1 percent on FHA transactions and 69.5 percent on VA closings. The highest closing rate was with conventional purchases: 76.6 percent.
At 43 days, there was no difference from July in the time to close a home loan. Turnaround was extended by a day from August of last year. Conventional turnaround was 42 days, FHA time to close was 44 days, and VA mortgages took 47 days to fund.
The average mortgage originated last month had a 724 FICO, a 79 percent loan-to-value ratio and a 26/39 percent debt-to-income ratio.
Credit scores averaged
726 on conventional refinances and 751 on conventional purchases. FHA scores averaged 658 on refinances and 676 on purchases, while VA refinance scores were 689 and VA purchase scores were 708.
Conventional LTV ratios were 63 percent on refinances and 80 percent on purchase financing. LTV ratios averaged 79 percent on FHA refinances and 95 percent on FHA purchases. VA LTV ratios were 90 percent on refinances and 98 percent on purchases.
At 25/39 percent, DTI ratios on conventional refinances were higher than 24/36 on conventional purchases. But on FHA transactions, ratios were lower on refinances at 28/44 percent
versus 29/44 percent on purchases. VA DTI ratios were 27/42 percent on refinances and 27/43 percent on purchases.
Last month’s refinance share was 32 percent, widening from 29 percent in July. Ellie Mae President and Chief Executive Officer Jonathan Corr explained in an accompanying announcement that consumers might be taking an opportunity to refinance as the recent rise in rates has taken a reprieve and home equity has grown.
But refinance share was still more narrow than the 35 percent share in August 2017. The most-recent share was 34 percent on conventional closings, 22 percent on FHA transactions and 28 percent on VA loans.
