*Refis Are Still A Huge Market Driver*
**New Data Emerges**
***New data from Ellie Mae shows that refinances are still driving the mortgage market. To get a meaningful view of lender “pull-through,” Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the October 2012 applications) to calculate an overall closing rate of 55.0% in January 2013, up slightly from 54.7% in December 2012, which is mostly due to an increase in refinances.
****“Since last summer, the refinance share has been climbing steadily and in January 2013 it reached 73%, the highest level since we began tracking this data in August 2011,” said Jonathan Corr, president and chief operating officer of Ellie Mae. “Continued low interest rates and home-buying seasonality are big reasons for this shift, but so is HARP 2.0 activity. Closed conventional refinances with LTVs of 95%-plus ticked up slightly to 11.6% in January 2013 from the previous high of 11.4% in December 2012, indicating that more underwater borrowers are being able to refinance thanks to HARP2.0.
****The Ellie Mae Origination Insight Report for January 2013 draws its data and insights from a sampling of loan applications that flow through Ellie Mae’s Encompass360 mortgage management software and Ellie Mae Network. The Origination Insight Report mines its application data from a robust sampling of approximately 44% of all mortgage applications that were initiated on the Encompass origination platform.
****“The share of FHA loans vs. conventional loans declined to 18% in January 2013, which has been a new low since our tracking began.” Corr continued, “This may indicate that higher premiums and other program changes are making FHA loans less attractive.”
****Corr also added, “Average credit scores for conventional loans in January 2013 were slightly lower compared to the same time last year A year ago, the average credit score was 769 for a conventional refinance and 763 for a similar purchase. In January 2013, those averages dropped to 763 for refinances and 760 for purchases. While the overall credit score requirement remains tight, it appears that we are beginning to see some loosening.”