Home loans for purchases increased to 57 percent in February, up from January’s 53 percent, according to the latest Origination Insight Report from Ellie Mae. The report also said that the average time to close all loans in February decreased to 46 days, down from 51 days in January.
“The purchase market led the way in February, representing 57 percent of total closed loans,” said Jonathan Corr, president and CEO of Ellie Mae. “Along with the growing purchase market, we’re seeing the time to close all loans decrease and FICO scores decline, trends that we will continue to watch in the coming months.”
As the 30-year note continued to rise in February, average FICO scores dropped. The average FICO score on all closed loans was 720.
Scores on refinance loans:
- Conventional refinance FICO scores dropped to 728 in February, down from 732 in January.
- FHA refinance FICO scores dropped to 649 in February, down from 651 in January.
- VA refinance FICO scores dropped five points to 702 in February.
Scores on purchase loans:
FICO scores on purchases stayed consistent from the prior month.
- FHA purchase FICO scores - 686,
- Conventional purchase - 752
- VA purchase - 707.
Closing rates for all loans decreased to 70.6 percent, down from 72.2 percent in January. Refinance closing rates decreased to 65.4 percent, down from 67.9 percent the month prior, and purchase closing rates decreased from 76.8 percent in January to 75.9 percent in February.
Additional research by Ellie Mae concerning the mortgage process indicated that 57 percent of homeowners applied for and completed their latest mortgage completely in person. In addition, 28 percent applied for their most recent mortgage using a combination of online and in-person interaction. Another 11 percent of homeowners applied for their latest mortgage completely online with no in-person interaction.
When asked what factor would have improved the mortgage process, approximately 40 percent of homeowners indicated they would have liked a faster process with fewer delays. Twenty percent indicated that a shorter, easier to understand application would be preferable, while 11 percent asked for more communication with their lender throughout the process.
Millennials were the most likely generation of homebuyers to begin their mortgage application online and finish it with an in-person interaction with their lender (30 percent). Gen X (28 percent) and Baby Boomer (20 percent) borrowers weren’t far behind in using this online and in-person approach.
“There’s no question that technology is playing a larger role in the home buying experience,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae. “As we expected, many homeowners are seeking a faster and more streamlined experience. And it’s not just a millennial phenomenon; it’s homebuyers of all ages and both genders.”
Note: The Origination Insight Report focuses on loans that closed in a specific month and compares their characteristics to similar loans that closed 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.