Interest rates continued to decline in February, driving up the share of refinances by two percentage points, According to the February Origination Insight Report from Ellie Mae.
The 30-year rate on all loans dropped to 3.86 percent, down from 3.96 percent the month prior and the 30-year rate on conventional loans fell below 4 percent for the first time since October 2019, dropping to 3.89 percent from 4.03 percent in January. Similarly, the 30-year rate on FHA loans dropped to 3.87 percent, down from 3.91 percent the month prior. The 30-year rate on VA loans followed suit, dropping to 3.62 percent from 3.64 percent in January.
As rates dropped, refinances increased, representing 48 percent of all closed loans in the month, up from 46 percent the month prior. Purchase loans still continued to make up the majority of the market, representing 52 percent of closed loans in February.
Other statistics of note in February included:
- The time to close all loans declined to 43 days in February, down from 48 days in January, likely due to seasonality.
- Closing rates on all loans increased to 78.3 percent in February, up from 77.2 percent the month prior. Closing rates on purchases held at 80.7 percent and closing rates on refinances increased to 76.0 percent, up from 75.8 percent the month prior.
- FICO scores on all closed loans held steady at 738 for the second month.
“Interest rates continued to decline into February which we believe is causing us to see a small refinance rebound,” said Jonathan Corr, President and CEO of Ellie Mae. “We will wait to see what the impacts of global factors, like stock market declines and the coronavirus, have on the housing market as we enter the spring. We continue to see our lenders consistently lowering their time to close and closing more loans as they leverage digital mortgage technology across more aspects of the loan origination workflow.”
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.