Banks and other lending institutions continued to relax their lending standards in July, as evidenced by data collected in Ellie Mae's Origination Insight Report.
The report draws its data from originations that flow through Ellie Mae's Encompass360 mortgage management software and the Ellie Mae Network – representing roughly 20% of all originations nationwide.
About 55.4% of all loans that were initiated 90 days prior to July 1 closed in July, up from 54.3% in June. It took an average of about 46 days to close a purchase loan deal.
Purchase loans represented 53% of the market – the largest percentage since Ellie Mae began tracking the data in August 2011 – while refinancings represented 47%.
‘This was a further indication that housing seems to be improving,’ says Jonathan Corr, president and chief operating officer of Ellie Mae, in a release.
In January, purchase loans represented 27% of the market, while refinancings represented 73%.
Corr notes that one part of the refinance market, HARP-related high LTV refinances (95% or more), had a resurgence, rising to 11.1% in July, compared to 8% in June, a 3% increase.
The report shows that credit standards continued to ease in July. The average FICO score fell to 737 from 742 in June.
‘Similarly, we saw slight increases in both loan-to-value and debt-to-income ratios last month – signs that lenders are willing to accept slightly more risk to maintain volume,’ Corr says.
"As the average 30-year fixed rate increased to 4.357 percent in July, ARM products have predictably become more popular, now 5.2 percent of closed loans, up from four percent in June," Corr adds.
To view the full report, click here.