*The Purchase Market Is Here*
**By Tony Garritano**
***We’ve seen rates rise and we’ve seen refinances decline. The purchase market that everyone has been predicting is just starting to take hold. According to the July Ellie Mae Insight Report, purchase activity went up in the month of July as underwriting moderated. Here’s the full picture:
****“In July, the mix of purchase loans to refinances was 53% versus 47%: the largest percentage of purchase loans since we began tracking the data in August 2011,” said Jonathan Corr, president and chief operating officer of Ellie Mae. “This was a further indication that housing seems to be improving.
****“One part of the refinance market, HARP-related high LTV refinances (95% or more), had a resurgence, rising more than three percent to 11.1% in July 2013, compared to 8.0% in June 2013,” he noted.”
****To get a meaningful view of lender “pull-through,” Ellie Mae reviewed a sampling of loan applications initiated 90 days prior (i.e., the April 2013 applications) to calculate an overall closing rate of 55.4% in July 2013, up from 54.3% in June 2013. The report draws its data and insights from a robust sampling of the significant volume of loan applications—more than 20% of all originations in the United States
****“Credit standards continued to ease in July,” added Corr. “The average FICO score fell to 737, from 742 in June 2013, and it is now at the lowest level since we began our tracking in August 2011. Similarly we saw slight increases in both loan-to-value and debt-to-income ratios last month—signs that lenders are willing to accept slightly more risk to maintain volume.
****“As the average 30-year fixed rate increased to 4.357% in July, ARM products have predictably become more popular, now 5.2% of closed loans, up from 4.0% in June,” Corr concluded.