Purchase Loan Share Climbs to 58% in September

Purchase share continued to inch up in September as refinances receded, according to data presented by ""Ellie Mae"":http://www.elliemae.com/ in the company's Origination Insight Report.

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The monthly report draws its data from a sampling of the loan applications flowing through Ellie Mae's network (about 20 percent of all originations in the United States). To get a meaningful view of lender pull-through, the company reviews applications initiated 90 days prior (the June 2013 applications, in this case).

September's report shows a continuance of trends started in June--namely, increasing interest in home purchase loans as credit standards ease.

""The share of purchase loans continued to grow in September 2013, climbing 1 percent to 58 percent of all loans even in the face of higher interest rates and seasonality,"" said Jonathan Corr, president and COO of Ellie Mae. ""This was the eighth consecutive month that the purchase loan percentage has increased or stayed steady.""

Purchase loans represented only a little more than a quarter of all loan activity as recently as January 2013, according to Ellie Mae's data. Recent ""mortgage application numbers"":https://themreport.com/articles/refinances-continue-to-lift-application-volume-2013-10-16 released by the Mortgage Bankers Association suggest October may see a boost in refinances relative to purchase volume.

Perhaps because of the increased buyer interest, purchase loans took slightly longer to close in September than they did in August--43 days compared to 42. Refinances closed in 40 days, down from 41. Overall, the time to close in September was 42 days, up from 41 the prior month.

For closed loans, the average FICO score was 732, two points below August and 17 points down from the start of the year--not to mention the lowest recorded level since Ellie Mae began tracking in August 2011. The average loan-to-value ratio (LTV) was 81 percent, ticking down from 82 percent in August and matching July.

Breaking the data down further, approximately 32 percent of loans closed in September had FICO scores under 700, nearly double that of September 2012 (17 percent).
Credit standards matched August on denied applications: an average FICO score of 696, and an average LTV of 84 percent.

Despite the overall loosening in credit standards, the closing rate for both purchase and refinance loans was slightly lower in September than in August--59.6 percent for purchases (down nearly 2 percentage points) and 45.2 percent for refinances (down 1.6 percentage points). The overall closing rate in September was 52.3 percent, down from 53.1 percent.