Average FICO Scores Drop In January

As the 30-year note continued to rise in January, average FICO scores on refinances dropped across conventional, FHA and VA loans. While average FICO scores decreased from 726 in December to 722 in January, conventional refinance FICO scores dropped to 732 in January, down from 739 in December and 743 in November. FHA refinance FICO scores dropped to 651 in January, down from 654 in December. VA refinance FICO scores dropped two points to 707 in January.

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Home loans for purchases dipped slightly in January, decreasing to 53 percent from 54 percent the month prior, according to the latest Origination Insight Report released by Ellie Mae. Refinances represented 47 percent of closed loans in the month, up slightly from 46 percent the month prior.

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Closing rates for all loans decreased slightly to 72.2 percent, down from the high of 73.2 percent in December. Refinance closing rates decreased to 67.9 percent, down from 69.6 percent the month prior and purchase closing rates decreased from 77 percent in December to 76.8 percent in January.

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The average time to close all loans increased to 51 days in January up from 50 days the month prior, a likely carry over from holiday seasonality. Similarly, the time to close a refinance increased to 53 days while time to close a purchase held at 48 days.

“Rates continued to increase in January and with that we began to see an uptick in adjustable rate mortgages, a trend that we will watch throughout the year,” said Jonathan Corr, president and CEO of Ellie Mae. “Additionally, FICO scores began to drop slightly across the board while closing rates remained high as homebuyers locked in rates to close their loans.”

The Origination Insight Report mines its application data from a sampling of approximately 75 percent of all mortgage applications that were initiated on the Encompass mortgage management solution. Ellie Mae also distributes data from its monthly Ellie Mae Millennial Tracker, which focuses on mortgage applications submitted by millennials during specific time periods. Ellie Mae defines millennials as applicants born between the years 1980 and 1999. The Millennial Tracker will continue to be released on the first Wednesday of each month.

About The Author

Tony Garritano

Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at tony@progressinlending.com.