As the refinance share of mortgage originations continues to deflate, the amount of time it takes to process a loan from application to closing continues to decline.
Of all residential loans that were closed during April 2017, conventional mortgages made up 63 percent. Conventional share was down from 64 percent one year earlier.
Another 23 percent of last month’s production were loans that are insured by the Federal Housing Administration. No change from April 2016 was noted for FHA share.
But the share of funded mortgages guaranteed by the Department of Veterans Affairs has widened to 10 percent in April 2017 from 9 percent twelve months earlier.
Those details and far more were revealed in the April 2017 Origination Insight Report from Ellie Mae Inc. The findings were determined through an 80 percent sampling of all mortgage applications initiated on the Encompass platform.
Of all loan applications started within the previous 90-day cycle, 69.4 percent had closed as of last month. The closing rate improved from 67.9 percent in March 2017 and 68.9 percent in April 2016.
April 2017’s closing rate was 63.5 percent on refinance transactions and 74.5 percent on loans to finance a home purchase. Conventional closing rates were 69.4 percent, FHA rates were 68.2 percent and VA rates were 65.3 percent.
It took 42 days to close a single-family mortgage last month, a day shorter than in March 2017 and the third consecutive month turn times shortened. Turnaround was two days better than in April 2016. Refinance turn times were 41 days, and purchase time tables were 42 days — though refinance turnaround has been longer than purchases for eight out of the past 12 months.
Conventional time to close was 41 days, while FHA turnaround was 43 days and VA closing times were 45 days.
FICO scores averaged 722 in the latest report. Scores tightened for the second consecutive month from 721 in March. The average was lower, though, than 723 the same month last year.
Conventional credit scores were 727 on refinances and 753 on purchase transactions. Scores averaged 650 on FHA refinances and 684 on FHA purchases. VA financing had average scores of 701 on refinance loans and 708 on purchase-money mortgages.
The Pleasanton, California-based technology provider said loan-to-value ratios averaged 80 percent in April 2017, the same as the prior month and a year prior.
LTV ratios averaged 66 percent on conventional refinances and 80 percent on conventional purchases. FHA ratios were 78 percent on refinances and 96 percent on purchases.
LTVs averaged 88 percent on refinances and 98 percent on purchase-money mortgages.
Debt-to-income ratios averaged 25/39 percent last month, no different than in the last report but slightly looser than 25/38 percent
in April 2016.
For conventional programs, DTI ratios averaged 26/40 percent. On FHA mortgages, DTIs averaged 30/47 percent on refinance transactions and 28/43 percent on home-purchase financing. VA ratios were 26/41 percent on refinances and 25/41 percent on purchase financing.
Refinance share was 35 percent, reduced from 37 percent in March and thinner each month since January’s 47 percent. The share was 40 percent in April 2016.
Last month’s refinance share was 43 percent on conventional loans, 19 percent on FHA mortgages and 29 percent on VA loans.
“The purchase market continued its rise in April, representing 65 percent of total closed loans,” Ellie Mae President and Chief Executive Officer Jonathan Corr said in the report.
