Purchase volume increased to 54% of all closed loans in December – up from 53% in November – as refinances fell to 46% of closed loans in the month, which is down from 47% the month prior, due mainly to rising interest rates, according to Ellie Mae’s Origination Insight report.
The average time to close all loans increased to 50 days, up from 49 days in November. The last time the average time to close rose to 50 days – in January 2016 – most people in the mortgage industry said it was due to implementation of the TILA-RESPA Integrated Disclosures rule; however, this time around, Ellie Mae says the slight increase is due to “holiday seasonality,” as well as “efforts to close loans before rates continue on their upward track.”
More specifically, the time to close a refinance increased to 52 days, and the time to close a purchase increased to 48 days – both up one day from November.
The closing rates for all loans increased to 73.2% in December – the highest rate in 2016. Refinance closing rates increased to 69.6%, up from 68.7% the month prior, while purchase closing rates increased to 77.0%, up from 76.1%.
“As rates began to increase, we saw purchases tick back up in December, signaling the start of a trend we expect to continue into 2017,” says Jonathan Corr, president and CEO of Ellie Mae, in a statement. “We also saw closing rates rise to the highest percentage in 2016 as home buyers locked in rates and lenders closed loans before the conclusion of the year.”
There was even a slight loosening of credit: The average FICO score for a closed loan in December was 726, down from 728 the month prior.