It’s nothing to cheer about, but the latest data from Ellie Mae’s March data gave home buyers reasons to smile slightly. Median FICO scores for FHA purchase loans have steadily risen over the quarter and closing rates for all mortgages took a big step upward.
Some 58% of mortgage applications were approved in March, a significant improvement over February (55.3%) and January (54.9%). Two years ago, the average closing rate was 49.0%.
FHA purchase loans showed significant progress as well. Media FICO scores for FHA purchase loans fell from 688 in January to 684 in March. Last year the average FICO for FHA purchase loans was 695.
The switchover from refinancing to purchase loans continued in March. Refinancing accounting for only 40 percent of the market compared to 40% for purchase loans.
“We continue to see the resurgence of a purchase-centric market as numbers inch closer to historical levels,” said Jonathan Corr, president and chief operating officer of Ellie Mae. “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. 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 backend, falling to 24/37.
“Average time to close in March 2014 fell to 40 days for all loans––five days faster than January 2014. The average purchase loan closed six days faster (41 days) in March than it did in January (47 days).”
In 2013, approximately 3.5 million loan applications ran through Ellie Mae’s Encompass mortgage management solution. The Origination Insight Report mines its application data from a robust sampling of approximately 57% of all mortgage applications that were initiated on the Encompass origination platform. Given the size of this sample and Ellie Mae’s market share, the Company believes the Origination Insight Report is a strong proxy of the underwriting standards that are being employed by lenders across the country.
Pingback: Closing Rates Rate a Smile | Belair Realty