The share of mortgage applications to close reached the highest level on record last month. In addition, the time it took to process and close a loan improved by four days likely as a result of increasing familiarity with new TRID disclosures.
As of February, 65 percent of all loans closed were conventional. Mortgages guaranteed by the Federal Housing Administration made up another 22 percent, while loans guaranteed by the Department of Veterans Affairs accounted for 9 percent.
Market share by loan type has shifted compared to the same month last year, when conventional share was 69 percent and FHA share was 19 percent. There was no year-over-year change, however, in VA market share.
Ellie Mae Inc. reported the findings in its Origination Insight Report
February 2016Â based on a sample of loan applications that were processed through its technology platform.
The latest month’s closing rate rose to 69.9 percent from 68.4 percent in January and only 60.0 percent in February 2015.
The closing rate, which reflects the share of fundings on applications started during the previous 90-day cycle, has never been this high since Pleasanton, California-based Ellie began tracking the data in August 2011.
The 65.6 percent closing rate on refinances was far lower than the 74.2 percent closing rate on purchases last month.
On conventional mortgages, 70.3 percent
of applications closed. The FHA closing rate was 67.8 percent, and the the VA closing rate was just 63.1 percent.
It took 46 days to closed the average loan, four days fewer than in January.
“This could be due to lenders becoming more familiar with the new Loan Estimate and Closing Disclosure forms and business process around Know Before You Owe,” Ellie Mae President and Chief Executive Officer Jonathan Corr said in an accompanying announcement.
But turnaround increased by eight days compared to February 2015.
Refinances took 44 days from start to finish in February 2016, while purchase financing turnaround was 48 days.
Conventional turnaround was 46 days, FHA turn times averaged 47 days, and VA time tables came in at 50 days.
Borrower FICO scores averaged 720 in February, a point higher than the previous month but 12 points lower than a year previous.
FICO scores on conventional loans averaged 726 on refinances and 752 on purchases.
Credit scores on FHA refinances averaged 650, and they were 686 on FHA purchase-money transactions.
On VA mortgages, FICO scores were 706 on refinances and two points lower on purchase financing.
Last month’s average loan-to-value ratio was 79 percent, unchanged from January and from February of last year.
Conventional refinance transactions had an average LTV ratio of 69 percent, while it jumped to 81 percent on conventional purchase-money mortgages.
LTV ratios averaged 79 percent on FHA refinances and 96 percent on FHA purchase financing.
At 88 percent, average LTVs on VA refinances were lest than the 98 percent on VA purchase transactions.
There was no change in average debt-to-income ratios in February 2016 at 25/39 percent. But DTI ratios have risen from 24/37 percent one year previous.
DTI ratios on conventional mortgages came to 25/40 percent on refinances and 23/35 percent on purchases.
But on FHA transactions, DTI ratios averaged 28/46 percent on refinancings and 27/41 percent on purchase financing.
On VA refinances, DTIs were 24/40 percent. On VA purchases, DTIs averaged 24/41 percent.
In the latest month, refinances accounted for 46 percent of all fundings. Refinance share slipped from 47 percent a month earlier and dropped from 59 percent a year earlier.
Refinance share was 57 percent on conventional mortgages during February 2016, while it was 23 percent on FHA-insured loans and 29 percent on VA-guaranteed mortgages.
