Ellie Mae’s January Origination Insight Report revealed that interest rates experienced a slight dip during the first month of 2020, falling from December’s 3.99% down to 3.96%. Refinances during the month made up 46% of total closed loans—unchanged from the month prior.
Conventional loan refinancing experienced a hike, rising from December’s 53% posting to a few percentage points higher at 55%. In contrast, January’s VA and FHA refinances declined slightly from December’s showings.
Another rise was reported by Ellie Mae, with its data showing that FICO scores on all closed loans in January rose just a tad from December: 735 to 738, respectively.
Ellie Mae also reported that the time to close all loans remained at 48 days for the second-consecutive month. Regarding sealing the deal, the report revealed that borrowers and buyers can expect to pay more when closing, with closing rates on all loans experiencing an uptick to 78.2% in January versus the previous month’s rate of 77.8%. Specifically, for purchases, the closing rate in January was 80.7%, while the closing rate for refinances was 75.8%.
“The start to 2020 saw interest rates decline and refinances hold steady, driving an increase in our closing rate to 78.2% in January,” said Ellie Mae President and CEO, Jonathan Corr on the Origination Insight Report.
Corr then proceeded to foreshadow what such movement may mean moving forward into 2020: “All indicators show that we will continue to see a healthy housing market in 2020 as more millennials look to purchase homes and interest rates remain at historic lows driving refinance activity. We do expect 2020 to bring some challenges for homebuyers, not because of what they can afford but rather what they can find due to lagging inventory.”