Ellie Mae has released its Origination Insight Report for July 2012, drawing its data and insights from a robust sampling of the significant volume of loan applications—more than 20 percent of all originations in the United States—that flow through Ellie Mae’s Encompass360 mortgage management software and the Ellie Mae Network. Ellie Mae found that 45.8 percent of all applications closed in July 2012 compared to 46.2 percent in June 2012.
“The 30-year note rates on closed loans declined to 3.870% in July, down from 3.992 percent in June, and were at the lowest point since we began tracking in August 2011,” said Jonathan Corr, chief operating officer of Ellie Mae. “With more borrowers ‘in the money,’ the refinance share of closed loans rose by 4% on a month-over-month basis. The percentage of closed conventional refinances with LTVs of 95 percent-plus declined for a second consecutive month to 8.7 percent in July from 10.2 percent in June, perhaps indicating that HARP 2.0 activity may be slowing."
In 2011, the total volume of mortgages that ran through Ellie Mae’s Encompass360 mortgage management software was approximately two million loan applications, or 20 percent of all U.S. mortgage originations. The Origination Insight Report mines its application data from a robust sampling of approximately 33 percent of all mortgage applications that were initiated on the Encompass origination platform. 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.
“In July, the closing rate for purchase loans increased for the third month in a row up to 58.7 percent from 57.8 percent in June and 56.8 percent in May––a sign that the purchase market may also be showing some traction,” said Corr. “The combination of extremely low interest rates and a strengthening purchase market pushed out closing times for both refinance and purchase loans in July. These time frames are similar to what we saw in January of last year, when a surge of activity challenged the industry’s capacity."
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.