Loan Closings Up in February; Credit Standards Unchanged

The rate of loan closings increased slightly in February despite steadiness in credit standards, according to the latest origination data from Ellie Mae.

Using a sample of loan applications initiated in November 2013, the company calculated a closing rate of 55.3 percent in its February Origination Insight Report—a small bump from 54.9 percent in January.

Meanwhile, credit standards on closed loans remained unchanged, averaging a FICO score of 724 and a loan-to-value ratio (LTV) of 82 percent. Compared to February 2013, though, standards were much more relaxed.

“Credit requirements remained steady month over month, but there has been significant loosening compared to where we were a year ago,” said Jonathan Corr, president and COO of Ellie Mae. “Last month, 33 percent of closed loans had an average FICO score under 700 compared to 24 percent in February 2013.”

Still, February’s closing rate came up short against the prior year, when it was 56.8 percent.

Among loans closed last month, purchase mortgages accounted for 57 percent—up from 53 percent in January—while refinance share turned down to 43 percent after a brief recovery period.

“This is the first time in four months that the share of purchase loans increased month-over-month and the largest one-month increase since August 2013, when the share of purchase loans also jumped four percentage points,” Corr noted.

Meanwhile, the share of adjustable-rate mortgages (ARM) as a percentage of total volume dropped from January’s 7.2 percent to 6.9 percent, reflecting greater demand for fixed-rate mortgages as the average 30-year rate pulled back to 4.66 percent.