Ellie Mae, a provider of enterprise-level, on-demand automated solutions for the residential mortgage industry, released its Origination Insight Report for January 2013. The report draws its data and insights from a robust sampling of the significant volume of loan applications — more than 20 percent of all originations in the United States — that flow through Ellie Mae’s Encompass360 mortgage management software and Ellie Mae Network.

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 percent in January 2013, up slightly from 54.7 percent 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 percent, 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 homebuying seasonality are big reasons for this shift, but so is HARP 2.0 activity. Closed conventional refinances with LTVs of 95 percent-plus ticked up slightly to 11.6 percent in January 2013 from the previous high of 11.4 percent in December 2012, indicating that more underwater borrowers are being able to refinance thanks to HARP2.0.

“The share of FHA loans versus conventional loans declined to 18 percent 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 (see full report ). 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.”

The Origination Insight Report focuses on loans that closed or were denied in a specific month and compares their characteristics to similar loans that closed or were denied three and six months earlier. The closing rate is calculated on a 90-day cycle rather than on a monthly basis because most loan applications typically take one and a half to two months from application to closing. Loans that do not close could still be active applications, or applications withdrawn by consumers or denied for incompleteness or nonqualification.

The Origination Insight Report details aggregated, anonymized data and does not disclose client-specific or proprietary information.