Lack of Inventory Pushes ARM Share to Eight-Year High

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Adjustable-rate mortgages (ARMs) represented 9.2% of all loans originated in December – an eight-year high – according to Ellie Mae’s monthly Origination Insight report.

A year ago, the ARM share was around 5.6%.

“With the strong demand for housing and the rapid increase in property value appreciation, more consumers are turning to ARMs in order to gain additional flexibility when competing for a home,” says Jonathan Corr, president and CEO of Ellie Mae. “This is another key indication of how demand has outpaced supply in the housing market as consumers pursue their dream of homeownership.”

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Refinances represented 29% of all loans originated in December, down from 30% in November and down from 40% in December 2017, according to the report.

It took an average of 47 days to close a mortgage loan in December, up from 46 in November and up from 44 days a year earlier.

The average time to close a refinance increased to 44 days, while the average time to close a purchase dropped to 47 days.

The closing rate for all loans was 71.4%, up from 70.1% in November.

The average FICO score on all closed loans decreased one point to 726. 

The average FICO score for an FHA purchase loan was 674. The average FICO score for an FHA refinance was 659.

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The average FICO score for a conventional purchase loan was 751 while the average FICO score for a conventional refinance was 732.

The average LTV remained at 79 for the fifth consecutive month.

DTI held at 26/39.

The report is based on closed loan data coming out of Ellie Mae’s Encompass loan origination platform. 

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