For the first time this year, lenders actually closed on more mortgage applications than they rejected in September. The closing rate was one of several positive signs for borrowers in Ellie Mae’s latest Origination Insight report. September also saw purchase mortgages account for the largest share of closings this year, some 61 percent compared to 45.3 percent for refinance loans.
The market share of conventional loans also increased to a high for the year, 72 percent, as borrowers continued to move away from FHA
loans, a trend that began in April at the height of the home buying season. FHA
accounted for only 19 percent of loans closed in September but median FICO scores were far below conventional loans. Median FICO for an FHA
refinancing was only 716 compare to 767 for a conventional loan.
For an FHA
purchase mortgage, the median FICO was only 701 compared to 762 for a purchase conventional loan. “In September, the share of conventional loans continued to outpace FHA
loans,” said Jonathan Corr, chief operating officer of Ellie Mae. “This is mostly likely the result of HARP
2.0 initiatives as well as increases in FHA
insurance premiums that took effect in April 2012. “The percentage of conventional refinances at 95 percent-plus LTV peaked at 11.0 percent in May 2012 and have been drifting down slowly ever since.
In September 2012, these loans, which are most likely HARP
2.0 loans, had leveled off at 7.43 percent, down from 7.74 percent in August 2012. “While closing rates for all loans rose last month, it was the closing rate for refinances that jumped significantly: from 40.9 percent in August 2012 to 45.3 percent in September 2012. This is also reflected in the increased time to close, up from 51 days in August 2012 to 53 days in September 2012, for refinances,”
Corr added. The originations report draws its data and insights from a robust sampling of the significant volume of loan applications—more than 20 percent of all originations in the United States—that flow through Ellie Mae’s Encompass360®
mortgage management software and Ellie Mae Network™. The Origination Insight Report mines its application data from a robust sampling of approximately 33 percent of all mortgage applications that were initiated on the Encompass origination platform.