Banks and other lending institutions continued to relax their lending standards in September, as evidenced by data collected in Ellie Mae's Origination Insight Report.
The report draws its data from originations that flow through Ellie Mae's Encompass360 loan origination platform and the Ellie Mae Network – representing roughly 20% of all originations nationwide.
About 52.3% of all loans that were initiated 90 days prior to Sept. 1 closed in September, down from 53.1% in August. It took an average of about 43 days to close a purchase loan deal.
Purchase loans represented 58% of the market, while refinancings represented 42%.
‘The share of purchase loans continued to grow in September 2013, climbing 1% to 58% of all loans even in the face of higher interest rates and seasonality,' says Jonathan Corr, president and chief operating officer of Ellie Mae, in a statement. ‘This was the eighth consecutive month that the purchase loan percentage has increased or stayed steady. In January 2013, purchases represented only 27% of closed loans.’
Despite the fact that a lower percentage of loans were closed, compared to August, the report shows that lenders eased their standards, as evidenced by the lower FICO scores. FICO scores for closed loans dropped to 732 compared to 734 in August.
‘September's averages were 15 points below where they were in January and the lowest level since we began our tracking in August 2011,’ notes Corr. ‘When you drill down farther, the change is even more apparent. For example, 31 percent of the closed loans in September had FICO scores under 700, compared to 17.46 percent of closed loans in September 2012.’
‘Similarly, debt-to-income (DTI) ratios rose again slightly last month,’ Corr adds. ‘DTIs went from 24/37 in August to 25/37 in September.’
To downlaod the full report, click here.