Mortgage Credit Tightened Slightly In March As Shift To Purchase Market Continues

Mortgage credit tightened slightly during March, with the average FICO score for closed loans rising to 725 from 724 in February, according to Ellie Mae's Origination Insight report.

The report also shows that purchase volume increased during the month, with purchases accounting for about 60% of all volume and refinances accounting for about 40%. In February, purchases accounted for about 57% of volume.

In addition, the report also shows that adjustable-rate mortgages are on the rise, as they accounted for about 7.4% of all volume, compared to 6.9% in February.

The number of days to close a loan continues to drop, along with overall volume. In March, it took an average of 40 days to close a loan (41 days for purchases and 37 days for refinances) compared to an average of 41 days in February (42 days for purchases and 40 days for refinances) and an average of 46 days in March 2013 (44 days for purchases and 47 days for refinances).

To get a meaningful view of lender "pull-through," Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the December 2013 applications) to calculate an overall closing rate of 58% in March, up from 55.3% in February.

‘We continue to see the resurgence of a purchase-centric market as numbers inch closer to historical levels,’ says Jonathan Corr, president and chief operating officer of Ellie Mae, in a release. ‘Purchases increased another three percentage points in March 2014 to represent 60% of loans – quite the difference from March 2013, when purchases represented only 38% of loans.

‘Credit requirements tightened ever so slightly last month,’ Corr says. ‘The average FICO score on all closed loans increased for the first time in 2014, rising one point to 725. The average debt-to-income ratio also tightened on both the front and back end, falling to 24/37.

‘Average time to close in March 2014 fell to 40 days for all loans – five days faster than January 2014,’ he adds. ‘The average purchase loan closed six days faster (41 days) in March than it did in January (47 days).’

The report is based on data derived from Ellie Mae's Encompass loan origination system.

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