Falling mortgage rates and a decreasing time to close loans has resulted in an uptick of purchase loans, according to the Ellie Mae Origination Insight Report released on Wednesday.
The report noted that the 30-year rates have declined for the second consecutive month to 4.86 percent from 5.01 percent in January. The time to close loans has also decreased by two or more days for all loan types. These factors have resulted in the percentage of purchase loans rising to 66 percent from 65 percent in January, even as the percentage of Adjustable Rate Mortgages (ARMs) decreased to 7.6 percent in February from 8.6 percent in the prior month.
Refinances, the report indicated, made up 34 percent of all closed loans. The average time to close refinance loans also decreased to 35 days, compared with 47 days for purchase loans.
Breaking up the rates by loan product, the report revealed that the average 30-year rate on FHA loans decreased to 4.91 percent in February. Conventional and VA rates decreased to 4.88 and 4.66 percent, respectively.
“Purchase percentages have increased following both the holiday season and the 30-year note rate decline,” said Jonathan Corr, President and CEO of Ellie Mae. “We expect this increase to continue as we enter the busier spring buying season.”
The closing rates for all loan types increased to 75.5 percent with refinance closing rates increasing to 70.8 percent and purchase closing rates increasing to 78.2 percent. The report noted that 70 percent of all closed loans had FICO scores over 700. While 70 percent of purchase loans had FICO scores over 700, 68 percent of refinances had FICO scores over 700.
Looking at the profiles of all closed loans, the report indicated that the average FICO score on all closed loans increased two points to 726 in February. Average loan to value increased to 78 and debt to income ratio decreased to 25/39.
Click here to read the full report.