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Lower Interest Rates Driving Demand for Refinancing

refinanceAccording to Ellie Mae’s latest Origination Insight Report, refinancing was on the rise in October 2017, with interest rates continuing to drop for the sixth month straight.

Jonathan Corr, President and CEO of Ellie Mae, said, “We are continuing to see borrowers take advantage of the lower interest rates as the refinance percentage increased to 39 percent of total loans in the month.” That’s up one percentage point compared with September 2017. October also saw increases across all loan types, with Federal Housing Administration (FHA) refinances sitting at 23 percent of all closed loans, conventional refinances at 46 percent, and U.S. Department of Veterans Affairs (VA) refinances coming in at 32 percent.

October’s numbers mark a trend of slow increase after a significant fall. In October 2016, the refinance numbers were at 47 percent. As of April 2017, that number had dipped to 35 percent. In comparison, purchase loans were at 53 percent in October 2016, and 61 percent as of the October 2017 report.

Conventional loans accounted for 66 percent of all closed loans in October 2017, with FHA loans holding steady at 20 percent and VA loans at 10 percent.The average FICO score on all closed loans came in at 724 for October. FHA refinance FICO scores rose one point to 650, while conventional refinance scores bumped up to 732 and VA refinance scores also rose a single point to 702. FICO scores for purchases dropped slightly for FHA and VA, but conventional purchase scores held steady at 752.

Closing time for all loans has been bouncing around in the forties throughout the past year. It held steady at 43 days in October 2017, which is one day longer than in April 2017 (42 days), but still notably better than a year ago (48 days in October 2016).

You can view the full October Origination Insight Report here [1].