August Ellie Mae Origination Insight Report Data Finds Interest Rates Fall To Record Lows; Refinances Rebound Slightly
Refinances rose to 56% of closed loans in August, up from 54% in July, according to the Origination Insight Report from Ellie Mae, now part of Intercontinental Exchange (ICE). The average 30-year loan rate dropped to a record low of 3.09%, contributing to increased refinancing activity. However, purchase loans fell to 44%, down from 46%. The time to close loans increased to 49 days, and FICO scores reached 752. With low rates and a slight rebound in refinances, the market remains attractive for new buyers.
- Refinancing rates increased to 56% of closed loans, indicating a rising trend.
- Average 30-year fixed loan rate dropped to 3.09%, the lowest since data tracking began.
- FICO scores rose to 752, indicating improved borrower creditworthiness.
- Closing rates increased slightly to 77.2%, reflecting a stable market.
- Percentage of purchase loans decreased to 44%, down from 46%.
- The time to close loans increased to 49 days, indicating potential operational inefficiencies.
PLEASANTON, Calif., Sept. 16, 2020 /PRNewswire/ -- Refinances rebounded slightly in August, representing the majority of closed loans in August at 56 percent, up from 54 percent in July, according to the latest Origination Insight Report from Ellie Mae®, the leading cloud-based loan origination platform provider for the mortgage industry and now part of Intercontinental Exchange, Inc. (NYSE: ICE). The percentage of purchases dipped to 44 percent in August, down from 46 percent the month prior.
This comes as the 30-year rate on all loans continued to fall to 3.09 percent, now the lowest rate since Ellie Mae began tracking this data and down from 3.24 percent the month prior. The 30-year note rate VA loans fell below 3 percent to 2.86 percent in August, down from 3.02 percent in July. The 30-year note rate on conventional loans fell to 3.12 percent in August, down from 3.26 percent in July. Similarly, the 30-year rate on FHA loans fell to 3.10 percent in August, down from 3.26 percent in July.
Other statistics of note in August included:
- The time to close all loans increased to 49 days in August, up from 47 days the month prior. Time to close for purchase loans increased to 45 days in August, up from 44 days in July and time to close for refinances increased to 51 days in August, up from 50 the month prior.
- FICO scores continued to increase to 2020 highs, rising to 752 for all loans, up from 750 the month prior.
- Closing rates increased slightly to 77.2 in August, up from 77.1 percent in July.
"Interest rates are at historic lows, driving volume across both purchases and refinances. In August of 2019 we saw 30-year rates just over four percent across all loans, while this month we're seeing average rates almost one percentage point lower. Not only does this enable homebuyers to get more home for their dollar, it allows new homebuyers who might be waiting for a good deal to enter the market," said Joe Tyrrell, chief operating officer, Ellie Mae. "As lenders continue to manage high volumes, technology is bridging the gap to add efficiency to manual workflows behind the scenes while freeing up workforces to provide the human interaction that homebuyers demand."
The Origination Insight Report mines data from a robust sampling of approximately 80 percent of all mortgage applications that were initiated on the Encompass® all-in-one mortgage management solution. Ellie Mae believes the Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.
In addition to the Origination Insight Report, Ellie Mae also distributes data from its monthly Ellie Mae Millennial Tracker on the first Wednesday of each month. The Ellie Mae Millennial Tracker focuses on mortgage applications submitted by borrowers born between the years 1980 and 1999.
Ellie Mae also offers Ellie Mae Insights™, the only analytics solution in the market that provides peer benchmarking comparison analysis in near real time. Ellie Mae Insights analyzes key metrics such as efficiency levels, operational costs, rates and market penetration, demographic data and pull through rates to help lenders of all sizes to make informed decisions.
MONTHLY ORIGINATION OVERVIEW FOR AUGUST 2020
August 2020* | July 2020* | 6 Months Ago (February | 1 Year Ago (August | |
Closed Loans | ||||
Purpose | ||||
Refinance | ||||
Purchase | ||||
Type | ||||
FHA | ||||
Conventional | ||||
VA | ||||
Days to Close | ||||
All | 49 | 47 | 43 | 42 |
Refinance | 50 | 50 | 40 | 39 |
Purchase | 45 | 44 | 45 | 45 |
Percentage of ARM and Fixed Loan Volume | ||||
ARM % | ||||
30-Year Rate | ||||
Average | ||||
*All references to months should be read as month ended. |
PROFILES OF CLOSED LOANS FOR AUGUST 2020
Closed First-Lien Loans | |
FICO Score (FICO) | 752 |
Loan-to-Value (LTV) | 74 |
Debt-to-Income (DTI) | 23/35 |
More information and analysis of closed and denied loans by loan purpose and investor are available in the full report at http://www.elliemae.com/about-us/news-reports/ellie-mae-reports/.
To get a meaningful view of lender pull-through, Ellie Mae reviewed a sampling of loan applications initiated 90 days prior—or the May 2020 applications—to calculate an overall closing rate of 77.2 percent in August 2020 (see full report).
About the Ellie Mae Origination Insight Report
The Origination Insight Report focuses on loans that closed in a specific month and compares their characteristics to similar loans. The closing rate is calculated on a 90-day cycle rather than on a monthly basis because most loan applications typically take one-and-a-half to two months from application to closing. Loans that do not close could still be active applications or applications withdrawn by consumers or denied for incompleteness or non-qualification.
The Origination Insight Report details aggregated, de-identified data pulled from Ellie Mae's Encompass origination platform.
News organizations have the right to reuse this data, provided that Ellie Mae, Inc. is credited as the source.
About Ellie Mae
Ellie Mae is the leading cloud-based loan origination platform provider for the mortgage industry. Ellie Mae's technology solutions enable lenders to originate more loans, lower origination costs, and reduce the time to close, all while ensuring the highest levels of compliance, quality, and efficiency. Visit EllieMae.com or call (877) 355-4362 to learn more.
© 2020 Ellie Mae, Inc. Ellie Mae®, Encompass®, AllRegs®, Mavent®, Velocify®, Capsilon®, the Ellie Mae logo and other trademarks or service marks of Ellie Mae, Inc. appearing herein are the property of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other company and product names may be trademarks or copyrights of their respective owners.
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SOURCE Ellie Mae
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