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

January 23, 2019 at 9:00 AM EST

PLEASANTON, Calif.--(BUSINESS WIRE)--Jan. 23, 2019-- 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.

© 2019 Ellie Mae, Inc. Ellie Mae®, Encompass®, AllRegs®, Mavent®, Velocify®, the Ellie Mae logo and other trademarks or service marks of Ellie Mae, Inc. appearing herein are the property of Ellie Mae, Inc. or its subsidiaries. All rights reserved. Other company and product names may be trademarks or copyrights of their respective owners.

Source: Ellie Mae, Inc.

Erica Harvill
Ellie Mae, Inc.
(925) 227-5913
Erica.Harvill@elliemae.com

Caitlin Coffee
Allison+Partners
(312) 635-8204
EllieMae@allisonpr.com