Market Analysis: Not Much Has Changed

*Not Much Has Changed*
**By Tony Garritano**

***Ellie Mae just released its report on mortgage activity for the month of June and it found more of the same. Despite record low interest rates, the percentage of refis was the same as a month prior as was the average time to close a loan. So, what did change? “In June, the average closed loan had a slightly higher credit score (746 vs. 744), lower loan to value (80% vs. 81%), and more conservative debt-to-income ratio (23/35 vs. 24/35) than in May,” said Jonathan Corr, chief operating officer of Ellie Mae. “This tracks with the slight decline in closed conventional refinances with LTVs of 95%-plus, which were 10.2% in June, down from 11% in May.”

****To get a meaningful view of lender “pull-through,” Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the March applications) to calculate a closing rate for June. Ellie Mae found that 46.2% of all applications closed in June 2012 compared to 47.2% in May 2012 (see full report).

****“June’s 30-year note rate at 3.992% was the lowest monthly rate since we started tracking in August 2011 and nearly two-thirds of a point lower than the rate at that time,” Corr noted. “So it is hardly surprising that borrowers are opting for 30-year mortgages and that the share of adjustable rate mortgages (3.3%) and 15-year loans (15.8%) is diminishing. Also in June, the average refinance loan closed in 47 days, one day faster than in May, but the average purchase loan took two days longer, or 46 days, to close,” he said.

****The report draws its data and insights from a robust sampling of the volume of loan applications that flow through Ellie Mae’s Encompass360 mortgage management software and Ellie Mae Network.