Ellie Mae: Interest Rate Rise Sparks Jump in Purchase Originations
Ellie Mae, Pleasanton, Calif., said a December rise in interest rates sparked an increase in purchase originations.
The company’s monthly Origination Insight Report said purchase loans accounted for 54 percent of total closed loans in December, up from 51 percent in November and the 2019 low of 49 percent in September. Last June saw the highest percentage of purchase loans at 69 percent of total closed loans.
The report noted interest rates rose again in December to 3.99 percent, up from 3.97 percent in November and the 2019 low of 3.93 percent in September.
“As we closed out 2019, we saw interest rates continue to rise to 3.99 percent, still well below the 2019 high of 5.01 percent in January,” said Jonathan Corr, President and CEO of Ellie Mae. “While we believe that seasonality played a part in the slowing of refinances, we believe that we will continue to see purchase percentages pick up in 2020 as refinance demand normalizes.”
Other December report data:
• Time to close all loans rose to 48 days in December, up from 45 days in November. Time to close a purchase increased to the highest point in 2019 at 51 days, while time to close a refinance increased to 45 days, up from 43 days in November.
• Time to refinance has been steadily increasing since April, when it stood at 33 days along with the increase in demand.
• Closing rates on all loans decreased slightly from the 2019 high in November to 77.8 percent in December. Closing rates on refinances dropped to 75.5 percent in December, down from 77.1 percent in November, while closing rates on purchases dropped to 80.3 percent, down from 80.6 percent in November.