Interest rates dropped to new historic lows in September, hovering at 3.00 percent on all loans, representing the lowest rate since Ellie Mae began tracking this data in 2011, and down from 3.09 percent the month prior. This is according to the latest Origination Insight Report from Ellie Mae, now ICE Mortgage Technology, a division of Intercontinental Exchange, Inc. (NYSE: ICE).
The 30-year note rate for VA loans dropped to 2.78 percent, down from 2.86 in August, putting it well below the 3.00 percent mark. Similarly, the 30-year rate on FHA loans fell to 3.01 percent, down from 3.10 percent the month prior. Conventional rates remained the highest overall at 3.02 percent, still down considerably from 3.12 percent the month prior.
The rate decreases coincide with the revival in refinances as they ticked back up to 58 percent in September, returning to their pre-summer percentages. Purchase loans dipped back to 42 percent of all closed loans in the month and while this is a significant drop from 50 percent in January, it is well above the May low of 35 percent of all closed loans.
Other statistics of note in September included:
- The time to close all loans increased to 51 days in September, up from 49 days in August. Time to close for purchase loans increased to 47 days in September, up from 45 days in August. Time to close for refinances increased to 54 days in September, up from 50 days in August.
- The FICO score average for all loans continued to increase to a new 2020 high, rising to 753 in September, up one point from the prior month.
- Closing rates decreased slightly to 77.1 in September, down from 77.2 percent in August.
“We are continuing to see interest rates decrease to new historic lows, hovering right at three percent for the month for all loans,” said Joe Tyrrell, president, ICE Mortgage Technology. “As we move into fall and the traditionally hot summer homebuying season normally tapers off, we will watch to see if purchase loan applications trend downward and refinances regain momentum. We know that homeowners are continuing to take advantage of the low rates, almost an entire percentage point lower than the same period in 2019, as a means to lower monthly payments and stretch their dollar.”
Tyrrell continued, “In addition, we’re seeing FICO scores rise to new 2020 highs, approximately 20 points higher than the same period in 2019, indicating that lenders are being more selective, but also that homebuyers and homeowners should understand the various loan products available to find the one that suits their profile best.”
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.
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.