The average time to close on a home loan shortened in April, and that marks the fourth consecutive month of faster-moving closings, according to the monthly Origination Insight Report [1] from ICE Mortgage Technology. ICE says its report data comes from a robust sampling of approximately 80% of all mortgage applications initiated on the Encompass [2]Lending Platform and offers insight into underwriting standards employed by lenders across the country.
The average closing time for April was 51 days, ICE reports, and emerging technology stands to make things increasingly speedy.
"The decrease in average time to close is not surprising, given the increase we have observed in the adoption of digital transformation tools, such as AIQ, our artificial intelligence offering that automates workflows for shifting to a more data-driven process, and consumer engagement suite for automating communication to all parties in the transaction," said Joe Tyrrell, President of ICE Mortgage Technology. "This trend also aligns with findings from our 2020 Borrower and Lender Insights Survey [3], in which both borrowers and lenders noted that digital mortgage technologies are making it faster and easier to close a mortgage loan, thus improving the overall experience for participants."
The most recent OIR also showed April was the second consecutive month of slowdown in share of refinances among total originations.
The percentage of refinances dropped to 56% of all closed loans in April, down from 63% in March. However, the percentage of purchases increased to 43% of total closed loans for the month of April, up from 36% in March, reflecting the highest percentage since August 2020.
Closing rates for all loans increased slightly to 78.0% in April, up from 77.9% in March. Closing rates on refinances increased to 78.8% in April, up from 78.0 % in March. Closing rates on purchase loans dropped to 76.7% in April, a decrease from the month prior (78.1).
The report also examines credit scores on loans that closed in April. It found Federal Housing Administration refinance FICO scores continued to decrease to 670 in April, down from 673 in March and 675 in February. Conventional refinance FICO scores also dropped to 757 in April, down from 762 the month prior. VA refinance FICO scores also fell to 731, down from 737 in March and 738 in February and January.
The comprehensive origination report is available in full at ICEMortgageTechnology.com [4].