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Low Rates Continue to Fuel Growth in Refi Volume, According to Ellie Mae Origination Insight Report
[December 17, 2014]

Low Rates Continue to Fuel Growth in Refi Volume, According to Ellie Mae Origination Insight Report


Lenders' share of mortgage refinancing volume rose for the fourth straight month in November as mortgage interest rates continued to fall, 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. Since July, refinances as a percentage of lenders' overall loan volume has climbed 13 percent from a 2014 low of 32 percent.

In addition to higher refinance volume, total closing rates on purchase loans rose to 66.5 percent, the highest since Ellie Mae began tracking this figure in August 2011. Meanwhile, the average 30-year fixed interest rate dropped to 4.273 percent, its lowest level since June 2013.

"With 2014 coming to an end, lenders are hopeful for a steady improvement in market conditions," said Jonathan Corr, president and COO of Ellie Mae. "Winter is normally a slow time for housing sales, yet the increase in refinancing volume is protecting many lenders from the cold. Meanwhile, lower interest rates and the return of the GSEs' three-percent down payment loan programs may help lenders and homebuyers get off to a great start this New Year."

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:

  • The average length of time to close a purchase loan rose to 41 days, up one day since October.
  • The average time to close a refinance loan dipped to 37 days, tying the lowest mark of the year.
  • Credit requirements are roughly the same as one year ago, as 31 percent of borrowers had an average FICO score of under 700 compared to 30 percent in November 2013.




 

MONTHLY ORIGINATION OVERVIEW FOR NOVEMBER 2014

 
    November 2014*   October 2014*   6 Months Ago   1 Year Ago
              (May 2014*)   (Nov. 2013*)
Closed Loans
Purpose
Refinance     45%   40%   33%   45%
Purchase     54%   60%   66%   55%
Type
FHA     17%   19%   22%   20%
Conventional     68%   65%   64%   69%
VA     11%   11%   9%   -
Days to Close
All     39   40   40   42
Refinance     37   39   39   37
Purchase     41   40   40   45
ARMs vs. Fixed / Length / Rate
ARM (News - Alert) %     6.1%   6.3%   7.6%   5.8%
15 Year %     10.3%   9.6%   9.7%   14.5%
30-Year

Note Rate

    4.273%   4.371%   4.530%   4.526%
 

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

 

 

PROFILES OF CLOSED AND DENIED LOANS FOR NOVEMBER 2014

 
  Closed First-Lien Loans   Denied Loans
    (All Types)   (All Types)

FICO Score (FICO)

  729   678
Loan-to-Value (LTV)   80   79
Debt-to-Income (DTI (News - Alert))   24/37   29/47

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 August 2014 applications-to calculate an overall closing rate of 60 percent in November 2014 (see full report).

About the Ellie Mae Origination Insight Report

In 2013, approximately 3.5 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 57 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.

© 2014 Ellie Mae, Inc. Ellie Mae®, Encompass®, AllRegs®, DataTrac®, Ellie Mae Network™, Total Quality Loan™, TQL™ and the Ellie Mae logo are registered trademarks or trademarks 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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