Press Release

Average Time to Close a Loan Increased to 50 Days According to Latest Origination Insight Report

Conventional purchase closing rates reach a new high in report at almost 74%

PLEASANTON, Calif. – February 17, 2016 – 2016 started off with the average time to close a loan increasing to 50 total days according to the latest Origination Insight Report released by Ellie Mae® (NYSE:ELLI), a leading provider of innovative on-demand software solutions and services for the residential mortgage industry. While the average time to close a refinance increased one day from 47 to 48 days, the average time to close a purchase loan climbed one day to 51. The average time to close FHA loans increased from 49 days to 51 days and conventional loans remained largely unchanged at 49 days. Time to close VA loans increased from 52 to 53 days.

Conventional purchase closing rates reached a new high, climbing above 73 percent for the first time since Ellie Mae began tracking data in August 2011. Closing rates for all loans increased one percentage point to 68 percent. Refinance closing rates increased to nearly 65 percent, while purchase closing rates increased to just over 72 percent.

In terms of loan purpose, purchases represented 52 percent of all closed loans while refinances as a percentage of lenders’ overall loan volume jumped to 47 percent.

Ellie Mae’s data also shows that the average FICO score on closed loans decreased from 722 in December to 719 in January, the largest month-to-month decline since mid-2015. The average FHA refinance FICO score decreased to 645, down from 651 in December.

“We continue to see the time to close lengthen month over month, now reaching 50 days, which is up four days since TRID went into effect,” said Jonathan Corr, president and CEO of Ellie Mae. “We’re also seeing an increase in purchase and refinance closing rates as they increase to 72.2 percent and 64.9 percent respectively, in January.”

The Origination Insight Report mines its application data from a robust sampling of approximately 66 percent of all mortgage applications that were initiated on the Encompass® all-in-one mortgage management solution. Ellie Mae believes the Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.

Other findings from the January report:

  • The average 30-year rate for all loans increased slightly to 4.30.
  • DTI remained consistent for the fourth consecutive month at 25/39.

MONTHLY ORIGINATION OVERVIEW FOR JANUARY 2016

  January
2016*
December
2015*
6 Months Ago
(Jul. 2015)*
1 Year Ago
(Jan. 2015)*
Closed Loans
Purpose
Refinance 47% 43% 36% 51%
Purchase 52% 56% 63% 48%
Type
FHA 22% 22% 24% 15%
Conventional 65% 65% 62% 70%
VA 10% 9% 10% 11%
Days to Close
All 50 49 48 40
Refinance 48 47 52 39
Purchase 51 50 45 40
Percentage of ARM & Fixed Loans
ARM % 5.3% 5.3% 5.5% 5.1%
15 Year % 11.1% 10.8% 9.2% 10.8%
30-Year Rate
Average 4.30% 4.26% 4.288% 4.154%

*All references to months should be read as month ended.

PROFILES OF CLOSED AND DENIED LOANS FOR JANUARY 2016
  Closed First-Lien Loans (All Types) Denied Loans
(All Types)
FICO Score (FICO) 719 645
Loan-to-Value (LTV) 79 88
Debt-to-Income (DTI) 25/39 28/50

More information and analysis of closed and denied loans by loan purpose and investor are available in the full report at http://www.elliemae.com/about-us/news-reports/ellie-mae-reports/.

To get a meaningful view of lender pull-through, Ellie Mae reviewed a sampling of loan applications initiated 90 days prior—or the October 2015 applications—to calculate an overall closing rate of 68.4 percent in January 2016 (see full report).

About the Ellie Mae Origination Insight Report

The Origination Insight Report mines its application data from a robust sampling of approximately 66 percent of all mortgage applications that are initiated through Ellie Mae’s Encompass all-in-one mortgage management solution. In 2014, approximately 3.7 million loan applications ran through Encompass. Given the size of this sample and Ellie Mae’s market share, the Company believes the Origination Insight Report is a strong proxy of the underwriting standards that are being employed by lenders across the country.

The Origination Insight Report focuses on loans that closed or were denied in a specific month and compares their characteristics to similar loans that closed or were denied three and six months earlier. The closing rate is calculated on a 90-day cycle rather than on a monthly basis because most loan applications typically take one-and-a-half to two months from application to closing. Loans that do not close could still be active applications or applications withdrawn by consumers or denied for incompleteness or non-qualification.

The Origination Insight Report details aggregated anonymized data. The report does not disclose client-specific or proprietary information.

News organizations have the right to reuse this data, provided that Ellie Mae, Inc. is credited as the source.

About Ellie Mae

Ellie Mae (NYSE:ELLI) is a leading provider of innovative on-demand software solutions and services for the residential mortgage industry. Mortgage lenders of all sizes use Ellie Mae’s Encompass® all-in-one mortgage management solution, Mavent Compliance Service, and AllRegs research, reference and education resources to improve compliance, loan quality and efficiency across the entire mortgage lifecycle. Visit EllieMae.com or call 877.355.4362 to learn more.

PRESS CONTACT

Erica Harvill
Ellie Mae, Inc.
(925) 227-5913
Erica.harvill@elliemae.com

Alexandra Gardell Kreuter
Allison+Partners
(646) 428-0618
EllieMae@allisonpr.com

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