Lenders are closing loans faster, thanks to technology, according to the latest Originations Insight Report by Ellie Mae. On the other hand, a decline in the 30-year note rate has ensured that the volume of closing loans remains high for lenders.
The report, which parsed data from approximately 80% of all mortgage applications that were initiated on Ellie Mae's Encompass mortgage management solution, indicated that the 30-year note rate had continued to drop for the fourth straight month to 4.61% in April. Month over month, it declined from 4.77% in March and was well below January's high of 5.01%.
The time to close all types of mortgage loans also dropped by two days from 42 days in March to 40 in April. Refinance loans followed suit with time to close dropping by a day to 33 days. Time to close a purchase loan also dropped by a day to 43 days during the month.
According to Jonathon Corr, President and CEO of Ellie Mae, technology was helping lenders reduce their time to close. "We are seeing closing times drop across the board as our lenders leverage technology for a more efficient and streamlined loan origination process," he said. "And as the 30-year note rate continues to decline and closing rates remain high, we expect to see an active spring home buying cycle."
Breaking down the origination data, the report indicated that at 65%, purchase loans made up the larger share of loans closed in April with refinance loans making 35% of the share. On the other hand, the percentage of Adjustable Rate Mortgages (ARMs) decreased to 6.8% in April down from 7.4% in the previous month. Closing rates also dropped slightly to 74.8% during the month compared with 75.3% in March.
Looking at the type of loans closed, the report indicated that while the share of FHA loans remained unchanged at 20%, conventional loans increased to 66% in April from 64% in March. However, VA loans decreased slightly from 11% to 10% in April.
Click here to read the full report.