Refi’s share of closed loans increased by 7bp in January
Ice Mortgage Technology (formerly Ellie Mae) said closed loans continued to show lower ticket rates in January, from an average of 2.93 percent in December to 2.88 percent. The decline occurred in all types of loans. The 30-year rate on conventional loans fell from 2.96% to 2.91% and the 30-year rate on FHA loans fell 8 basis points to 2.86%. The VA rate was on average 2.60% compared to 2.66% the previous month.
As rates fell, the percentage of refinances continued to rise, ice Mortgage origination reportsaid, representing 67% of loans closed, up from 60% in December 2020. The refinancing share varied between lenders, from 74% for conventional loans to 36% for VA loans and 24% for FHA. The FHA refi share increased by 5 basis points month over month, while the refi share for each of the other two increased by 6 basis points.
“Interest rates continued to fall in January, pushing the refinancing share up by seven percent,” said Joe Tyrrell, president of ICE Mortgage Technology. “We continue to monitor average FICO scores as many lenders are tightening credit during this time of increasing lending volume. We continue to see growth on our Encompass lending platform, indicating that our lenders are using digital mortgage technology to serve their clients and close this record number of loans as quickly as possible. ”
The distribution of loans among lenders changed slightly from December to January. The conventional share fell from 81% to 84% of creations, while the FHA and VA each lost a share of 1 point, to 9% and 5%, respectively.
The deadline for all loans was stable at 58 days from December to January, as were the deadlines for refinancing (59 days) and purchasing loans (57 days).
The closing rate, which is based on a sample of loan applications initiated 90 days earlier, i.e. in October 2020, was 76.2%. The rate in December was 76.5%.
ICA Insight Origin Report uses data from a large sample of about 80 percent of all mortgage applications launched on its proprietary lending platform. The company says the Report is a good indicator of the underwriting standards used by lenders across the country.