Purchase Loan Share Surpasses Refinances in July

The percentage of purchase loans finally eclipsed the share of refinances in July, according to ""Ellie Mae's"":http://www.elliemae.com/ Origination Insight Report for the month.

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The report draws data from a sampling of loan applications flowing through Ellie Mae's software and network. To get a meaningful view of lender ""pull-through,"" the company reviewed applications initiated in April.

The data sampled shows the mix of purchase loans to refinances was 53 percent versus 47 percent in July--the largest percentage of purchase loans since Ellie Mae began tracking in August 2011 and also the first time purchase share has crossed the 50 percent threshold in at least two years.

Jonathan Corr, president and COO of Ellie Mae, said the rise in purchase loan share ""was a further indication that housing seems to be improving.""

Also notable was an increase in the share of adjustable-rate mortgage (ARM) loans as fixed rates keep climbing. According to Ellie Mae, ARMs represented 5.2 percent of closed loans in July compared to 4.0 percent in June and 2.1 percent in January.

The closing rate for all loans in July was 55.4 percent, an improvement from 54.3 percent in June and the fourth consecutive monthly increase. The closing rate for refinances was 51.3 percent (up from 49.9 percent), while the closing rate for purchases was 61.4 percent (up from 60.4 percent).

The increase in closing rates went hand-in-hand with an easing in credit standards. The average FICO score for a loan closed in July was 737, down from 742 in June and the lowest level since tracking began. The loan-to-value (LTV) ratio for a loan closed in July was 81 percent compared to June's 80 percent.

For denied loans, the average FICO score was 702 (up from 701), while the average LTV ratio was 84 percent (flat for the third straight month).

Closing timelines were essentially the same, with only refinances seeing a slight increase in days to close (48 days compared to 47). Purchase loans took the same amount of time to close in July as they did in June--46 days--while the overall average time to close also stayed flat at 47 days.