December Origination Insight Report From Ellie Mae Shows Adjustable Rate Mortgage Usage Hits Eight-Year High as Consumers Compete for Homes

For FHAs, the 30-year rate increased to 5.20, Conventional rates increased to 5.19 and VA rates rose to 5.01.

Information
Content
Key Points: 
  • For FHAs, the 30-year rate increased to 5.20, Conventional rates increased to 5.19 and VA rates rose to 5.01.
  • 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.


According to the December Origination
Insight Report
from Ellie
Mae
® (NYSE:ELLI), the leading cloud-based platform
provider for the mortgage finance industry, the percentage of Adjustable
Rate Mortgages (ARMs) reached 9.2 percent, the highest percentage in
2018 and since Ellie Mae began tracking data in 2011. This is up from
8.9 percent the month prior and the 2018 low of 5.5 percent.

The increase in ARMs continues to be correlated to the 30-year rate,
which rose to 5.17 for loans closed in December, up from 5.15 the month
prior. For FHAs, the 30-year rate increased to 5.20, Conventional rates
increased to 5.19 and VA rates rose to 5.01.

“With the strong demand for housing and the rapid increase in property
value appreciation, more consumers are turning to Adjustable Rate
Mortgages in order to gain additional flexibility when competing for a
home,” said Jonathan Corr, president and CEO of Ellie Mae. “This is
another key indication of how demand has outpaced supply in the housing
market as consumers pursue their dream of homeownership.”

Other statistics of note in December included:

  • The time to close all loans increased to 47 days in December, up from
    46 days in November. Time to close a purchase loan decreased to 47
    days, while time to close a refinance increased to 44 days.
  • The percentage of purchase loans rose to 71 percent of total loans in
    December, up from 70 percent the month prior.
  • Overall FICO scores dropped one point to 726. LTV held at 79 for the
    fifth month and DTI held at 26/39.

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.

 

MONTHLY ORIGINATION OVERVIEW FOR DECEMBER 2018

      Dec. 2018*   Nov. 2018*   6 Months Ago

(Jun. 2018*)

  1 Year Ago

(Dec. 2017*)

Closed Loans
Purpose
Refinance     29%   30%   29%   40%
Purchase     71%   70%   71%   60%
Type
FHA     20%   19%   20%   20%
Conventional     64%   65%   66%   66%
VA     11%   10%   10%   10%
Days to Close
All     47   46   42   44
Refinance     44   43   37   41
Purchase     47   48   44   46
Percentage of ARM and Fixed Loan Volume
ARM %     9.2%   8.9%   6.9%   5.6%
30-Year Rate
Average     5.170%   5.150%   4.900%   4.280%

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

 
 

PROFILES OF CLOSED LOANS FOR DECEMBER 2018

      Closed First-Lien Loans
(All Types)
FICO Score (FICO)     726
Loan-to-Value (LTV)     79
Debt-to-Income (DTI)     26/39
   

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 September
2018 applications—to calculate an overall closing rate of 71.4 percent
in December 2018 (see full report).

About the Ellie Mae Origination Insight Report

The Origination Insight Report focuses on loans that closed in a
specific month and compares their characteristics to similar loans. 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 pulled from Ellie Mae’s Encompass origination platform.

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 the leading cloud-based platform provider for
the mortgage finance industry. Ellie Mae’s technology solutions enable
lenders to originate more loans, lower origination costs, and reduce the
time to close, all while ensuring the highest levels of compliance,
quality, and efficiency. Visit EllieMae.com
or call (877) 355-4362 to learn more.

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