The percentage of loans originated for purchasing homes increased again in April, the third consecutive month they have done so. According Ellie Mae’s Origination Insight Report for April, those loans made up 42 percent of the total originations during the month compared to 38 percent in March and 27 percent in January. It was the largest market share since July 2012 when purchase mortgages also made up 42 percent of the total. The average interest rate on a 30 year fixed-rate mortgage in April was 3.808 compared to 3.908 for all loans closed in 2012.
FHA loans made up 22 percent of originations and Conventional loans 68 percent compared to 21 percent and 70 percent respectively in March. Fifteen-year mortgages made up 15.3 percent of all mortgages and adjustable rate mortgages had a 3.2 percent share, the highest since last July. Ellie Mae’s report draws its data from the three million originations that are handled by its mortgage management software and network, more than 20 percent of the U.S. total.
Loans took an average of 46 days to close, 47 days for refinances and 44 for purchases. This timeline has ebbed and flowed over the last year but 46 days is the lowest overall average closing time since last summer.
“The spring buying season appeared to be in full bloom in April with the percentage of closed purchase loans reaching 42% last month, up from 38% in March 2013 and 32% in February 2013,” said Jonathan Corr, president and chief operating officer of Ellie Mae. The last time purchase loans broke the 40% mark was back in July 2012.
To get a meaningful view of lender “pull-through,” Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the January 2013 applications) to calculate an overall closing rate of 53.2% in April 2013, down from 55.1% in March 2013. Closed first lien loans of all types had an average FICO Score of 742 and a loan to value ratio of 81 percent. The debt-to-income ratio was 23/35.
“The trend toward more relaxed credit also continued in April 2013 as the average FICO score decreased slightly for the fifth consecutive month to 742 in April 2013 from 743 in March 2013,” added Corr. He said the slight decline in pullthrough rates from 55.1 in March may be a reaction to the higher interest rates in April.
There were some signs that that HARP 2.0 may be slowing down: Conventional refinances at 95%-plus LTV dropped for the first time since August 2012, falling to 11.6% in April 2013 from 13% in March 2013,” Corr said.