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Refi Share Jumps to Highest Level Since 2013, According to Ellie Mae Origination Insight Report
Steady drop in rates is giving homeowners a second chance to lower mortgage payments
PLEASANTON, Calif. – February 18, 2015 – Lenders in January saw their share of refinancing activity jump eight percentage points to comprise 51 percent of all loan volume, the highest level in more than a year and a half, 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. Meanwhile, the closing rate for all loans rose for the fourth consecutive month to 62.4 percent, the highest level since Ellie Mae began tracking this data in 2011.
According to the January Origination Insight Report, the average interest rate for a 30-year fixed rate mortgage fell from 4.251% to 4.154%, more than one half of a percent lower than the January 2014 rate of 4.723%. Rates are at their lowest level since July 2013, according to Ellie Mae’s data.
“Homeowners who missed refinancing over the past year because they did not have enough equity in their homes are getting a second chance in 2015,” said Jonathan Corr, president and CEO of Ellie Mae. “Lower rates and the decision by the FHA to lower the mortgage insurance premium (MIP) are also good news for the purchase market.”
The Origination Insight Report mines its application data from a robust sampling of approximately 57 percent of all mortgage applications that were initiated on the Encompass® origination platform. Ellie Mae believes the Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.
Other findings of the report include:
- Despite the jump in refinance share, the average closing time for refinances fell from 42 days to 39 days.
- The percentage of closed loans with an average FICO score below 700 dropped from 32 percent in January 2014 to 30 percent last month.
- The average FICO score on closed VA purchase loans and refinances climbed to 704 and 716.
MONTHLY ORIGINATION OVERVIEW FOR JANUARY 2015
6 Months Ago
1 Year Ago
|Days to Close|
|ARMs vs. Fixed, Length, Rate|
|15 Year %||10.8%||9.9%||8.9%||15.0%|
|30 Year – Note Rate||4.154%||4.251%||4.388%||4.723%|
*All references to months should be read as month ended.
PROFILES OF CLOSED AND DENIED LOANS FOR JANUARY 2015
|Closed First-Lien Loans (All Types)||
|FICO Score (FICO)||731||681|
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 2014 applications—to calculate an overall closing rate of 62.4 percent in January 2015 (see full report).
About the Ellie Mae Origination Insight Report
In 2014, approximately 3.7 million loan applications ran through Ellie Mae's Encompass mortgage management solution. 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 origination platform. 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. Ellie Mae’s all-in-one Encompass® mortgage management solution provides one system of record that allows banks, credit unions and mortgage lenders to originate and fund mortgages and improve compliance, loan quality and efficiency. Visit EllieMae.com or call 877.355.4362 to learn more.
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