A decline in interest rates on all closed loans in April drove an uptick in refinances, Ellie Mae reported Wednesday.
Ellie Mae's Origination Insight Report showed that the share of refinances rose 10 percentage points to 65% of all closed loans. The increase was fueled by a 17-basis-point drop in the 30-year rate on conventional loans, down from 3.65% in March to 3.48% in April.
Similarly, the interest rate on FHA loans dropped from 3.76% to 3.56%, while the 30-year rate on VA loans went down from 3.45% to 3.31%.
"Interest rates continued to decline in April, driving up the share of refinances by 10%," said Jonathan Corr, president and CEO of Ellie Mae. "We're also seeing FICO scores increase as lenders manage the current economic uncertainty by tightening credit. Ellie Mae has seen record volumes on our Encompass Digital Lending Platform in recent weeks, indicating that by leveraging digital mortgage technology, our lenders are able to serve their customers through this time of rapid change."
The time to close all loans took longer in April than in March, up two days to 42. FICO scores were also on the rise as more banks and lenders tighten credit during the COVID-19 pandemic. FICO scores on all loans climbed from 742 to 749 month over month.
Conventional refinance FICO scores jumped from 758 in March to 763 in April, marking the highest score since January 2013.