The average credit score for loans closed in September fell to 723, down from 724 in August and down from 726 in September 2014 to reach the lowest level since 2011, according to Ellie Mae's Origination Insight Report.
In addition, credit availability on refinances appears to have increased in the third quarter, as the overall average FICO and debt-to-income ratio loosened materially compared with the second quarter.
‘Average credit scores declined to the lowest levels we've seen since 2011,’ says Jonathan Corr, president and CEO of Ellie Mae, in a release. ‘We are also seeing rates fall while the time to close is also decreasing. It will be interesting to see if these trends continue as we begin to see impacts from [the Consumer Financial Protection Bureau's new TILA-RESPA Integrated Disclosures rules].’
About 42% of all loans in September were refinances while 57% were purchases – whereas in August 37% were refinances and 62% were purchases. This shift was likely driven by the recent dip in interest rates.
Roughly 66% of all loan applications made it to closing for the third consecutive month. The closing rate on purchase loans increased to 71%.
The time to close for all loans decreased for the fourth consecutive month to 46 days, down from 47 days in August.