Refinance Share Slips in November as Purchase Loans Climb

Purchase originations gained a bit more ground on refinances in November, according to ""Ellie Mae's"":http://www.elliemae.com/ latest ""_Origination Insight Report_"":http://www.elliemae.com/origination-insight-reports/EMOriginationInsightReportNovember2012.PDF.

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The report draws data from a sampling of loan applications that flow through Ellie Mae's Encompass360 software and the Ellie Mae Network. By the company's estimate, more than 20 percent of originations in the United States pass through its network. Loan applications sampled for the report are typically initiated 90 days prior (August, in this case) to account for the time that passes between application and closing.

According to the findings, refinance originations pulled back slightly to represent 68 percent of loans closed, down from 69 percent in the October report. Meanwhile, the share of purchase loans increased to 32 percent from 31 percent previously.

Though refinances are slowly losing ground, refinance share remains well above its May level, when refinance and purchase shares were fairly equal (54 percent to 46 percent, respectively).

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The closing rate on all loans was 52.3 percent, down from October's 54.5 percent but up from every other month in the past year. The closing rate for purchase loans slid down a bit, dropping to 60.8 percent, while refinances took a relatively big hit, falling to a 48 percent closing rate.

Conventional mortgages made up 73 percent of total activity, a slight slip down from 74 percent reported in October. The share of mortgages insured through the Federal Housing Administration (FHA) remained flat at 19 percent, unchanged from October and September.

The average number of days to close a loan in November was 50, a drop from 54 days in October. While purchase mortgages took a bit longer to close (48 days compared to 47 days previously), refinance closing times shortened significantly, falling from 57 days to 51 days.

The average FICO score for loans closed in November's report stood at 750 for the fourth straight month, while the average FICO score for denied loans bumped up a bit to 707. The average loan-to-value ratio (LTV) for closed first-lien loans increased one percentage point to 79 percent, while the average LTV for denied loans dropped to 86 percent.

The average FICO score for closed FHA loans dropped two points in both the purchase and refinance categories to 698 and 716, respectively.

The share of conventional finances with a LTV of 95 percent or higher rose for the third month in a row, reaching 9.62 percent. According to Ellie Mae COO Jonathan Corr, the continued increases in high-LTV refinances is a sign ""that HARP may still have some legs.""