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Rates Move Lower for Eighth Consecutive Month, Driving Refis

September 19, 2019
by admin

Thirty-year mortgage loans closed in August carried an average interest rate of 4.07 percent according to Ellie Mae’s Origination Insight Report. Rates were down for the eighth consecutive month, easing back from an average of 4.18 percent in July.

Ellie Mae said the month-over-month decline in rates continues to drive up the share of originations that are for refinancing. They accounted for 43 percent of all loans closed during the month compared to 38 percent in July. That increase drove purchase originations under a 60 percent share for the first time this year. The refi share popped up by 3 percentage points for all three major loan types.

“Interest rates continue to decline and we’re seeing homeowners capitalize on the refinance opportunity throughout the month of August,” said Jonathan Corr, president and CEO of Ellie Mae. “As we enter the fall and the market expects further rate cuts from the Fed, we will watch to see if the share of refinances continues to climb further.”

The conventional loan share of originations picked up 3 percentage points month-over-month, accounting for 69 percent of loans closed. Most of that gain came at the expense of FHA loans which declined 2 points to a 17 percent share. VA loans held steady at 10 percent.

Closing rates improved; the rate for all loans was 77.3 percent, up from 77.0 percent in July. Closing rates on purchases increased to 80.0 percent in August from 79.3 percent in July, while closing rates on refinances dropped slightly to 72.5 from 72.9 percent the prior month. Ellie Mae computes the closing rates from a sample of applications submitted three months earlier.

The time to close all loans was unchanged at 42 days while the time to close a refinance loan decreased 1 day to 39 and the time to close a purchase loan increased from 43 days to 45 days in August.

The Origination Insight Report mines data from a sample of approximately 80 percent of all mortgage applications that were initiated on its proprietary mortgage management system. The company says its report is a strong proxy of the underwriting standards employed by lenders across the country.

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