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Closing Rates Fall in April as Purchase Loans Gain Greater Share

The gap between purchase loans and refinances continued to close in April, according to ""Ellie Mae's"":http://www.elliemae.com/ latest Origination Insight Report.


The report draws data from a sampling of the loan applications that flow through Ellie Mae's Encompass360 software and the Ellie Mae Network (estimated to be more than 20 percent of all originations in the United States). To get a meaningful view of lender ""pull-through,"" the company reviewed loan applications initiated 90 days prior--the January 2013 applications, effectively.

According to Ellie Mae's findings, purchase loans made up 42 percent of loans closed in April, up from 38 percent in March, while refinances represented 58 percent.


According to Ellie Mae president and COO Jonathan Corr, the last time purchase loans broke the 40 percent mark was July 2012.

Among purchase loans, the closing rate was about 58.2 percent, while the rate for refinances was 50.5 percent. The overall closing rate for loans analyzed in the sample was 53.2 percent, a pull back from March.

""This may be a reaction to interest rates, which had been climbing for the past five months and then reversed course and fell to 3.808 in April 2013 from 3.813 in March 2013,"" Corr explained.

The average closing time, meanwhile, held steady from March at 46 days (47 days for refinances and 44 days for purchase loans).

While closing rates declined, so too did the average FICO score for closed loans (to 742 from 743). The average score was also slightly lower for denied applications--from 702 to 701. The drop in average FICO score on closed loans marks the fifth in as many months.

Finally, the share of conventional refinances with loan-to-value ratios of 95 percent or more fell to 11.6 percent in April, down from 13 percent month-over-month. The decrease indicates refinance activity through the Home Affordable Refinance Program (HARP) may be slowing down, Corr said.


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