Credit scores on closed loans fell to their lowest level since February of 2014, according to the latest Origination Insight Report released by Ellie Mae® (NYSE:ELLI), a leading provider of innovative on-demand software solutions and services for the residential mortgage industry. The average FICO score on all closed loans reached 724, while average FICO scores on closed FHA refinances and purchases held steady at 660 and 689, respectively.

Ellie Mae’s data also showed that conventional refinances rose three points to represent 48 percent of lenders’ conventional loan volume in August. Additionally, over 66 percent of all loan applications closed for the second straight month, remaining at the highest level since Ellie Mae began tracking this data in August 2011. The closing rate on purchase loans remained above 70 percent.

“As we usher in fall, credit scores dropped to their lowest level since February 2014 and we saw a small rise in refinances as a percentage of closed loans,” said Jonathan Corr, president and CEO of Ellie Mae. “We also continue to see modest improvements in credit availability.”

The Origination Insight Report mines its application data from a robust sampling of approximately 66 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.

Other findings from the August report:

  • The average 30-year rate for all loans eclipsed 4.3 for the first time since October 2014.
  • The overall closing rate for all purchase loans increased slightly to 70.8% in August.

MONTHLY ORIGINATION OVERVIEW FOR AUGUST 2015

    August 2015*   July 2015*  

6 Months Ago
(Feb. 2015*)

  

1 Year Ago
(Aug. 2014*)

Closed Loans
Purpose
Refinance 37% 36% 59% 33%
Purchase 62% 63% 41% 66%
Type
FHA 24% 24% 19% 20%
Conventional 63% 62% 69% 64%
VA 10% 10% 9% 12%
Days to Close
All 47 48 38 39
Refinance 50 52 36 39
Purchase 45 45 40 38
Percentage of ARM and Fixed Loan Volume
ARM % 5.6% 5.5% 4.0% 6.2%
15 Year % 9.8% 9.2% 11.1% 9.1%
30-Year Rate
Average 4.313% 4.288% 4.008% 4.386%

*All references to months should be read as month ended.

PROFILES OF CLOSED AND DENIED LOANS FOR August 2015

   

Closed First-Lien Loans
(All Types)

  

Denied Loans
(All Types)

FICO Score (FICO) 724 668
Loan-to-Value (LTV) 81 84
Debt-to-Income (DTI) 25/38 28/47

More information and analysis of closed and denied loans by loan purpose and investor are available in the full report at http://www.elliemae.com/about-us/news-reports/ellie-mae-reports/.

To get a meaningful view of lender pull-through, Ellie Mae reviewed a sampling of loan applications initiated 90 days prior—or the May 2015 applications—to calculate an overall closing rate of 66.3 percent in August 2015 (see full report).

About the Ellie Mae Origination Insight Report

The Origination Insight Report mines its application data from a robust sampling of approximately 66 percent of all mortgage applications that are initiated through Ellie Mae's Encompass all-in-one mortgage management solution. In 2014, approximately 3.7 million loan applications ran through Encompass. 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.

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 non-qualification.

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

News organizations have the right to reuse this data, provided that Ellie Mae, Inc. is credited as the source.

About Ellie Mae:

Ellie Mae (NYSE:ELLI) is a leading provider of innovative on-demand software solutions and services for the residential mortgage industry. Mortgage lenders of all sizes use Ellie Mae’s Encompass® all-in-one mortgage management solution, Mavent Compliance Service and AllRegs research, reference and education resources to improve compliance, loan quality and efficiency across the entire mortgage lifecycle. Visit EllieMae.com or call 877.355.4362 to learn more.

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