Ellie Mae’s Origination Insights Report revealed that refinances may be “leveling out” as interest rates for all closed loans fell in May to 3.43%. This is a slight decline from the prior month’s 3.48%.
The time to close all loans rose to 45 days in May from April’s 42 days. FICO scores on all loans rose to 750 in May—up one point from the prior month. Closing rates also fell slightly from 76.5% to 76%.
“Interest rates continued to decline in May, but we are seeing signs of refinances leveling out as the percentage of closed refinances held at 65% for the second month,” said Jonathan Corr, President and CEO of Ellie Mae. “As we enter the summer months that typically bring a busier purchase market, we will watch to see if the numbers shift further as homebuyers continue to take advantage of low rates and a loosening of inventory after a tight March and April driven by the shelter in place.”
Refinances accounted for 65% of all loans closed in May, which is unchanged from the previous month. Purchases remained at 35%. Refinances in November 2019 accounted for just 49% of all closed loans and 32% last year.
The Mortgage Bankers Association (MBA) latest report on mortgage activity revealed applications rose 9.3% weekly for the week ending June 5.
Purchase applications continued its run of success, rising week-over-week by 15% and annually by 13%.
"Fueled again by low mortgage rates, pent-up demand from earlier this spring, and states reopening across the country, purchase mortgage applications and refinances both increased. The recovery in the purchase market continues to gain steam, with the seasonally adjusted index rising to its highest level since January. Purchase activity increased for the eighth straight week and was a notable 13% higher than a year ago," said Joel Kan, MBA's AVP of Economic and Industry Forecasting. "Refinances moved higher for the first time in nearly two months, with both conventional and government applications rising and the overall index coming in 80% above year-ago levels."