As interest rates slowly tick up, purchase originations are now again outpacing refinance originations, according to a new report from Ellie Mae (ELLI).
Ellie Mae’s Origination Insight Report for April, which is derived from a “robust sampling” of approximately 66% of all mortgage applications that were initiated on Ellie Mae’s Encompass mortgage management solution, showed that 52% of mortgage loan originations were purchases in April.
Refinance originations made up 47% of the total originations for the month of April, marking the first month since December that purchases outpaced refinances, according to Ellie Mae’s report.
“An improving economy and ongoing attractive rates seem to be contributing to the rise in purchase percentage as we move full speed into the spring buying season,” said Jonathan Corr, president and CEO of Ellie Mae.
Ellie Mae’s report isn’t the only one that shows an increase in purchases.
According to the latest forecast from the Mortgage Bankers Association, purchase originations are expected to finish 2015 at $730 billion, while refinance originations are expected to come in at $551 billion.
The increase in purchase originations isn’t the only positive news in Ellie Mae’s report.
The report also shows that the overall closing rate on all loans exceeded 65% for the first time since Ellie Mae first began reporting the data in August 2011.
In April, 65.2% of all loan applications were closed, according to Ellie Mae’s data. Of those, 64% of refinance applications were closed and 66.5% of purchase applications were closed.
Loans closed in April closed in 45 days on average, which Ellie Mae’s report suggests is likely due to the higher-than-expected origination volume the industry is seeing.
The 45 days it took to close was the highest number days to close a loan since January 2014, Ellie Mae’s report states.
Overall, conventional loans made up 64% of all originations in April, according to Ellie Mae’s report. Federal Housing Administration loans made up 24% of the total, followed by Department of Veterans Affairs loans made up 9% of the total, and “other,” which made up 3%.
Additionally, the average FICO score on closed loans fell slightly to 729 in the month of April, marking the first time the average FICO on closed loans was under 730 in 2015.
