February Origination Insight Report from Ellie Mae Shows Time to Close Shortens in February as Interest Rates Continue to Rise

PLEASANTON, Calif. – March 21, 2018 – The time to close all loans decreased from 44 days in January to 42 days in February according to the February Origination Insight Report from Ellie Mae® (NYSE:ELLI), the leading cloud-based platform provider for the mortgage finance industry. Time to close all purchase loans decreased from 47 days in January to 45 in February and time to close all refinances dropped from 40 days in January to 37 days in February. This is a significant drop from 2017 data that shows time to close all refinances was 47 days. Time to close FHA loans also decreased from 47 days in January to 43 days in February and time to close a conventional loan shrank from 43 days in January to 41 days in February. Time to close VA loans shrank from 50 days in January to 47 days in February.

This comes as 30-year interest rates continue to rise from 4.330 in January to 4.480 in February, the highest rate since May of 2014. The percentage of closed ARMs held at 5.5 percent for the second month.

Closing rates decreased slightly with closing rates on all loans decreasing from 70.9 percent to 70.6 percent and closing rates on refinances decreasing from 65.5 percent to 65.0 percent. Closing rates on purchases held at 75.7 percent for the second month.

“As expected, we are seeing the percentage of refinances taper back off to the projected industry levels,” said Jonathan Corr, president and CEO of Ellie Mae. “And with interest rates on the rise, we’re seeing the purchase market begin to gain some momentum. We know that the shift to a purchase market will drive the shortened time to close and we will watch to see if the trend continues into the spring and summer months.”

Other statistics of note in February included:

  • The percentage of refinances dropped from 45 percent of all closed loans in January to 43 percent of all closed loans in February. The percentage of purchases increased to 57 percent of total closed loans.
  • The breakdown of type of loans remained the same for the second month with FHA loans representing 19 percent of closed loans, conventional loans representing 67 percent and VA loans representing 10 percent.
  • Overall FICO scores held steady at 721 for the second month. LTV increased from 77 to 78 and DTI held at 26/40.

The Origination Insight Report mines data from a robust sampling of approximately 80 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.

In addition to the Origination Insight Report, Ellie Mae also distributes data from its monthly Ellie Mae Millennial Tracker on the first Wednesday of each month. The Ellie Mae Millennial Tracker focuses on mortgage applications submitted by borrowers born between the years 1980 and 1999.

MONTHLY ORIGINATION OVERVIEW FOR FEBRUARY 2018

  February
2018*
January
2018*
6 Months Ago
(Aug. 2017)*
1 Year Ago
(Feb. 2017)*
Closed Loans
Purpose
Refinance 43% 45% 35% 43%
Purchase 57% 55% 65% 57%
Type
FHA 19% 19% 22% 23%
Conventional 67% 67% 64% 63%
VA 10% 10% 10% 10%
Days to Close
All 42 44 42 46
Refinance 37 40 41 47
Purchase 45 47 43 45
Percentage of ARM and Fixed Loan Volume
ARM % 5.5% 5.5% 5.7% 5.3%
30-Year Rate
Average 4.480% 4.330% 4.270% 4.360%

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

PROFILES OF CLOSED AND DENIED LOANS FOR FEBRUARY 2018
  Closed First-Lien Loans (All Types)
FICO Score (FICO) 721
Loan-to-Value (LTV) 78
Debt-to-Income (DTI) 26/40

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 November 2017 applications—to calculate an overall closing rate of 70.6 percent in February 2018 (see full report).

About the Ellie Mae Origination Insight Report

The Origination Insight Report focuses on loans that closed in a specific month and compares their characteristics to similar loans that closed 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 pulled from Ellie Mae’s Encompass origination platform.

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 the leading cloud-based platform provider for the mortgage finance industry. Ellie Mae’s technology solutions enable lenders to originate more loans, reduce origination costs, and shorten the time to close, all while ensuring the highest levels of compliance, quality and efficiency. 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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© 2018 Ellie Mae, Inc. Ellie Mae®, Encompass®, AllRegs®, the Ellie Mae logo and other trademarks or service marks of Ellie Mae, Inc. appearing herein are the property of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other company and product names may be trademarks or copyrights of their respective owners.

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