The number of closed purchase loans continued their upward march with the percentage of closed loans rising four percentage points to 66 percent in April according to the Origination Insight Report released by Ellie Mae on Wednesday. This, despite rising interest rates that touched their highest point during the month under review.
"This month we saw interest rates increase to the highest percentage point since Ellie Mae began reporting data in 2011 and with that, the percentage of purchases increased 4 percentage points to 66 percent of total closed loans," said Jonathon Corr, President and CEO of Ellie Mae.
According to Ellie Mae data, 30-year interest rates in April rose to 4.79 percent up from 4.69 percent in March, indicating their highest point since the firm began tracking mortgage rates in 2011. The lowest point for interest rates in 2018 was recorded in January when they touched 4.33 percent. The percentage of Adjustable Rate Mortgages (ARMs) increased from 6.3 percent in March to 6.6 percent in April, their highest since June 2014.
The percentage of refinances however decreased across the board with FHA refinances dropping from 23 percent to 22 percent on a month-over-month basis. Of the total refinance loans, conventional refinances dropped from 43 percent in March to 38 percent in April while VA refinances dropped to 27 percent in April from 28 percent in the month prior.
As the market enters the summer homebuying season, Corr said that Ellie Mae expects to see a robust market for purchase loans. “We’re entering the peak summer homebuying months and despite tight inventories, we expect to see a robust purchase market. We’re also seeing our lenders’ time to close purchases decrease month-over-month as they leverage our true digital mortgage solutions for better efficiency,” Corr said.
The time to close all loans in April remained stable at 41 days for the second month, while time to close conventional purchase loans dropped one day to 41 days in April. Overall FICO scores increased slightly for the third straight month to 723, while LTV remained unchanged at 79.