September Ellie Mae Origination Insight Report Data Shows Interest Rates Drop To New Historic Lows; Refinances Continue To Gain Traction
In September 2020, interest rates for loans reached a historic low of 3.00%, down from 3.09% in August, according to the Origination Insight Report by Ellie Mae, now part of ICE Mortgage Technology. VA loans saw rates drop to 2.78%, while FHA loans fell to 3.01%. Refinances accounted for 58% of closed loans, with purchase loans at 42%. Although the average FICO score rose to 753, closing rates slightly decreased. The rising interest rates present opportunities for homeowners to lower payments.
- Interest rates decreased to a historic low of 3.00%, encouraging refinancing.
- Refinances increased to 58% of closed loans, indicating strong demand.
- Average FICO scores rose to 753, suggesting improved credit quality among borrowers.
- Purchase loans dropped to 42%, down from 50% in January, indicating weaker demand.
PLEASANTON, Calif., Oct. 21, 2020 /PRNewswire/ -- Interest rates dropped to new historic lows in September, hovering at 3.00 percent on all loans, representing the lowest rate since Ellie Mae began tracking this data in 2011, and down from 3.09 percent the month prior. This is according to the latest Origination Insight Report from Ellie Mae®, the leading cloud-based loan origination platform provider for the mortgage industry and now ICE Mortgage Technology, a division of Intercontinental Exchange, Inc. (NYSE: ICE). The 30-year note rate for VA loans dropped to 2.78 percent, down from 2.86 in August, putting it well below the 3.00 percent mark. Similarly, the 30-year rate on FHA loans fell to 3.01 percent, down from 3.10 percent the month prior. Conventional rates remained the highest overall at 3.02 percent, still down considerably from 3.12 percent the month prior.
The rate decreases coincide with the revival in refinances as they ticked back up to 58 percent in September, returning to their pre-summer percentages. Purchase loans dipped back to 42 percent of all closed loans in the month and while this is a significant drop from 50 percent in January, it is well above the May low of 35 percent of all closed loans.
Other statistics of note in September included:
- The time to close all loans increased to 51 days in September, up from 49 days in August. Time to close for purchase loans increased to 47 days in September, up from 45 days in August. Time to close for refinances increased to 54 days in September, up from 50 days in August.
- The FICO score average for all loans continued to increase to a new 2020 high, rising to 753 in September, up one point from the prior month.
- Closing rates decreased slightly to 77.1 in September, down from 77.2 percent in August.
"We are continuing to see interest rates decrease to new historic lows, hovering right at three percent for the month for all loans," said Joe Tyrrell, president, ICE Mortgage Technology. "As we move into fall and the traditionally hot summer homebuying season normally tapers off, we will watch to see if purchase loan applications trend downward and refinances regain momentum. We know that homeowners are continuing to take advantage of the low rates, almost an entire percentage point lower than the same period in 2019, as a means to lower monthly payments and stretch their dollar."
Tyrrell continued, "In addition, we're seeing FICO scores rise to new 2020 highs, approximately 20 points higher than the same period in 2019, indicating that lenders are being more selective, but also that homebuyers and homeowners should understand the various loan products available to find the one that suits their profile best."
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 SEPTEMBER 2020
September | August 2020* | 6 Months Ago (March 2020*) | 1 Year Ago (September | |
Closed Loans | ||||
Purpose | ||||
Refinance | ||||
Purchase | ||||
Type | ||||
FHA | ||||
Conventional | ||||
VA | ||||
Days to Close | ||||
All | 51 | 49 | 40 | 43 |
Refinance | 54 | 50 | 35 | 39 |
Purchase | 47 | 45 | 45 | 46 |
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 SEPTEMBER 2020
Closed First-Lien Loans (All Types) | |
FICO Score (FICO) | 753 |
Loan-to-Value (LTV) | 73 |
Debt-to-Income (DTI) | 23/34 |
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 June 2020 applications—to calculate an overall closing rate of 77.1 percent in September 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, now a part of ICE Mortgage Technology, a division of Intercontinental Exchange, Inc. (NYSE: ICE), 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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