What are the advantages of declining originations for mortgage lenders?
There aren't many, but one is a drop in the average number of days to close – which in turn helps drive borrower satisfaction.
According to Ellie Mae's Origination Insight Report, the average number of days to close a mortgage in April dropped below 40 to 39 for the first time since August 2011.
The report also shows that the mortgage industry has now firmly crossed into a purchase market. In April, the purchase share of originations rose 3%, compared to March, bringing purchases to 63% of all volume.
In February and March, it seemed some lenders were making a serious effort to go after the underserved market by dropping FICO scores and down-payment requirements – but the trend of loosening of credit reversed course slightly in April: According to the report, the average FICO score on all loans closed was 726, compared to 725 in March and 724 in February.
Still, credit is considerably looser than it was at this time one year ago: The report shows that 33% of all loans closed in April had an average FICO score of under 700, compared to 23% of purchase loans closed in April 2013.
Looking at conventional purchase loans, the average FICO score in April was 755 – unchanged from the first three months of the year.
Looking at Federal Housing Administration purchase loans, the average FICO score in April was 685, compared to 684 in March.
The average interest rate on a conventional 30-year mortgage was 4.62% for the month, according to the report. But the historically low rates have apparently not been enough to entice spring home buyers, as purchase volume has essentially remained stagnant for the first four months of this year.
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