As refinances continue to make up the smallest monthly share of mortgage originations during recent years, the closing rate has strengthened, and conventional share has widened.
Out of all single-family loans that were closed during July, two-thirds were conventional mortgages. Conventional share has widened from 64 percent one year previous.
Mortgages insured by the Federal Housing Administration accounted for 20 percent of last month’s national mortgage production, less than the 22 percent share as of July 2017.
Another 10 percent was for mortgages guaranteed by the Department of Veterans Affairs. VA share was no different than in the same month last year.
Details about last month’s originations were reported Wednesday by Ellie Mae Inc. in its Origination Insight Report | July 2018.
The closing rate, which reflects all applications started in the prior 90-day cycle that have closed, rose to 70.9 percent from 70.5 percent in June. It was also better than 70.6 percent as of a year prior. Last month’s closing rate was 63.7 percent on refinances and 75.0 percent on purchases.
Conventional closings had a conversion rate of 71.6 percent, while the closing rate was 69.2 percent on FHA transactions and on VA originations.
Average turnaround on last month’s business was 43 days, a day longer than in June and the same number of days as in July 2017. Time to close was 41 days on refinances and 44 days on purchases, while the time table was 43 days on conventional loans, 45 days on FHA transactions, and 47 days of VA closings.
FICO scores averaged 725 on July 2018’s originations, a point lower than a month earlier but a point higher than a year earlier.
Conventional credit scores were 726 on refinances and 751 on purchases, while FHA scores averaged 657 on refinances and 676 on purchases. Credit scores were 689 on VA refinances and 709 on VA purchases.
There was no change from June 2018 or July 2017 for average loan-to-value ratios, which were 80 percent. Conventional refinances had an average LTV ratio of 63 percent on refinances and 80 percent on loans to purchase a home. LTV ratios averaged 78 percent on FHA refinances and 95 percent on FHA purchase-money loans, while VA ratios were 90 percent on refinances and 98 percent on purchases.
At 26/39 percent, average debt-to-income ratios were the same as the preceding month and higher than 25/38 percent in the same month last year.
DTI ratios averaged 26/39 percent on conventional refinances and 25/36 percent on conventional purchases. On FHA closings, the ratios were 28/44 percent on refinancings and 29/44 percent on purchase financing. DTI ratios for veterans mortgages were 27/42 percent on refinances and 27/43 percent on purchases.
At 29 percent, refinance share remained at its thinnest level since Ellie began tracking the data in August 2011. The share was 35 percent a year earlier. Refinance share was 31 percent on conventional loans, 19 percent on FHA transactions and 25 percent on VA transactions.
But the thinning refinance share means that the share of purchases has been widening.
“The purchase market remained solid in July and as we see inventories rise, we might begin to see a transition to a buyer’s market,” Ellie Mae President and Chief Executive Officer Jonathan Corr stated in an accompanying announcement. “The summer home buying season is still in full swing and while interest rates have risen, we expect to see a continued increase in purchase percentages.”
