Refinancing increased its share of total originations in September, rising 3 percentage points from August to 38 percent of all closed loans. Ellie Mae, in its Originations Insight report says the refinance share was the highest since February and set forth two possible reasons. First, interest rates on closed loans during the month dipped to the lowest of the year, 4.21 percent. Second, the time to close a refinance fell to 40 days, the shortest timeline since February 2015.
After remaining steady for several months, the distribution of loans shifted slightly. The conventional loan share picked up 2 points to 66 percent at the expense of FHA loans which dropped 2 points to 20 percent. The VA share remained at 10 percent as it has all year.
While refinancing loans closed faster, purchase loans did not. Closing time increased from 43 to 44 days and was higher for all types of purchase loans.
The closing rate across all loans ticked down 0.1 percentage points to 71.6 percent. The rate for refinance loans rose from 63.9 percent in August to 64.8 percent but that was offset by a decline in purchase loan closings from 76.8 percent to 76.4 percent. Ellie Mae bases closing rates on a sampling of loan applications initiated 90 days earlier, in this case the June 2017 applications.
Ellie Mae’s Origination Insight Report mines data from a sampling of approximately 80 percent of all mortgage applications that were initiated on its mortgage management software. The company believes its data is a strong proxy of the underwriting standards employed by lenders across the country.