The percentage of refinances climbed to 40 percent of all closed loans, up 1 percent from the month prior according to the December Origination Insight Report from Ellie Mae, the leading cloud-based platform provider for the mortgage finance industry.
The percentage of FHA refinances increased to 25 percent of closed loans in the month, up 1 percentage point, and the percentage of conventional refinances increased to 47 percent of closed loans in December, up from 45 percent the month prior.
“As we closed out 2017 we saw an increase in the percentage of refinances due to seasonality as fewer purchases take place in the fourth quarter, and likely homebuyers were taking advantage of the mortgage deductibility limit before it decreased to $750,000 on Dec. 15,” Ellie Mae President/CEO Jonathan Corr said in the report. “We probably can also attribute some of the increase in closing rates to last-minute efforts by borrowers to close loans before the tax changes took effect.”
In December, closing rates increased across the board with closing rates on all loans increasing from 70.9 percent to 71.2 percent, closing rates on refinances increasing from 65.1 percent to 65.6 percent and closing rates on purchases increasing from 75.5 percent to 76.1 percent.
Closing rates also increased across FHA, conventional and VA loans for both purchases and refinances. Other statistics of note in December included:
- The percentage breakdown of all closed loans remained steady with conventional loans at 66 percent, FHA loans at 20 percent and VA loans at 10 percent.
- Closing time for all loans increased slightly to 44 days, up one day from the month prior.
- 30-year interest rates increased to 4.280 from 4.240 the month prior.
- The percentage of ARMs held steady at 5.6 percent.
The Origination Insight Report mines data from a robust sampling of approximately 80 percent of all mortgage applications that were initiated on the Encompass all-in-one mortgage management solution. Ellie Mae believes the Origination Insight Report is a strong proxy of the underwriting standards employed by lenders across the country.
In addition to the Origination Insight Report, Ellie Mae also distributes data from its monthly Ellie Mae Millennial Tracker on the first Wednesday of each month. The Ellie Mae Millennial Tracker focuses on mortgage applications submitted by borrowers born between the years 1980 and 1999.