Average Time to Close Loans Falls Again

Ellie Mae, Pleasanton, Pleasanton, Calif., said the average time to close a loan nationally decreased in February to 42 days, from 44 in January.

The company’s monthly Origination Insight Report said time to close all purchase loans decreased from 47 days in January to 45 in February, while time to close all refinances dropped from 40 days in January to 37 days in February. Ellie Mae President and CEO Jonathan Corr said this represented a “significant drop” from 2017 data, which shows time to close all refinances was 47 days.

The report also said time to close FHA loans also decreased from 47 days in January to 43 days in February and time to close a conventional loan shrank from 43 days in January to 41 days in February. Time to close VA loans shrank from 50 days in January to 47 days in February.

Ellie Mae reported closing rates decreased slightly on all loans from 70.9 percent to 70.6 percent, with closing rates on refinances decreasing from 65.5 percent to 65.0 percent. Closing rates on purchases held at 75.7 percent for the second month.

“As expected, we are seeing the percentage of refinances taper back off to the projected industry levels,”Corr said. “And with interest rates on the rise, we’re seeing the purchase market begin to gain some momentum. We know that the shift to a purchase market will drive the shortened time to close and we will watch to see if the trend continues into the spring and summer months.”

The report said the percentage of refinances dropped from 45% of all closed loans in January to 43% in February, tapering back off to projected industry levels. Likewise, the percentage of purchases increased to 57% of total closed loans as interest rates continue to rise.

Breakdown of type of loans remained the same for the second month, the report said, with FHA loans representing 19% of closed loans, conventional loans representing 67% and VA loans representing 10%. Overall FICO scores held steady at 721 for the second month; LTV increased from 77 to 78 and DTI held at 26/40.