Borrowers generated significantly fewer pre-approval letters in the third quarter compared with the second quarter, according to the latest LenderLogix Homebuyer Intelligence Report.
Borrowers generated 49,392 pre-approval letters through LenderLogix’s QuickQual pre-approval platform, a decrease of 15% compared with the second quarter.
The average number of pre-approved borrowers per loan officer decreased slightly to 28.5, down from 29 in the second quarter.
The average pre-approval letter loan amount increased by 26% to $388,215, up from $308,681 in the second quarter.
That was fueled by a 23% increase in the average sales price of $446,390 – up from $362,780 in the second quarter.
The average down payment shrank marginally to 13%, down from 15% in the previous quarter.
Conventional loans remained the most popular for pre-approved borrowers, staying consistent at 76%.
All categories held steady through there third quarter, according to the report, with FHA pre-approvals barely climbing, from 17.8% to 17.9%, while VA (4%) and USDA (1%) maintained their share when compared with the second quarter.
“With the Fed’s announcement that rates will likely drop again, it’s not surprising to see steady-to-slow developments as homebuyers wait for the rate,” says Patrick O’Brien, co-founder and CEO of said LenderLogix, in a statement.
Of the borrowers using QuickQual, the average number of days between pre-approval and loan submission increased to 91 days in the third quarter, up nearly 7% from 85 days in the second quarter.
The longest duration between pre-approval and application decreased by ten days from 603 in the second quarter to 593 in the third quarter.
The conversion rate from borrowers using QuickQual to loan application decreased slightly from 58% to 56%.
Borrowers generated an average of eight pre-approval letters before converting.
“Homebuyers’ behavior has a lot to do with expectations, and we are certainly seeing that with our holding pattern,” O’Brien says. “With Fannie Mae signaling this fall that its 30-year fixed rate will land at 6.2 percent by the end of the year, bringing it in line with the MBA’s expected rate before both glide in below 6 percent in 2025, we can see the effect of anticipation. Nonetheless, there are those who have found what they are looking for now, and they know those lowered rates will mean more demand that could place them in a bidding war.”
Photo: Karsten Winegeart