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October Purchase Loan Share Crosses 60% Line

Only months after crossing the 50 percent threshold, purchase loans in October made up more than 60 percent of the market, ""Ellie Mae"":http://www.elliemae.com/ revealed in its most recent ""Origination Insight Report"":http://www.elliemae.com/origination-insight-reports/EMOriginationInsightReportOctober2013.pdf.


According to Ellie Mae's data, which draws from a sampling of the loan applications flowing through the company's network, purchase loan share was 61 percent in October, the highest since the company began tracking in August 2011 and nearly double the 31 percent share recorded the same month last year.

""This has been the ninth consecutive month that the purchase loan percentage has either increased or stayed steady,"" said Jonathan Corr, president and COO of Ellie Mae.


As purchase share climbed, however, the closing rate fell for the second month. Ellie Mae calculated a closing rate of 56.9 percent for purchase loans closed in October, while refinances had a closing rate of 44.6 percent (compared to 59.6 percent and 45.2 percent, respectively).

Overall, October's loan closing rate was 51.4 percent, down from 52.3 percent.

There was also a greater delay between application and closing. The average time to close for all loans in October was 45 days, an increase from 42 in September. Both refinances and purchase loans saw their closing times rise by the same amount--three days--averaging 43 and 46 days, respectively.

Credit standards remained the same on closed loans last month, with an average FICO score of 732 and an average loan-to-value (LTV) ratio of 81 percent. For denied loans, the average FICO was 689, down from 696, and the average LTV was 83 percent, down from 84 percent.

On the refinance front, Ellie Mae noted a cool-off in activity under the Home Affordable Refinance Program (HARP). Conventional refinances with an LTV of 95 percent or greater have been cut nearly in half over the last several months, falling from 13.4 percent of all of refinances in August to 7.3 percent in October.


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