Ellie Mae: Refinances Back on the Rise

Ellie Mae, Pleasanton, Calif., said the percentage of refinances rose in December, the result of low interest rates and a lack of purchase inventory.

The company’s monthly Origination Insights report said refinances rose to 40 percent of all closed loans, up 1 percent from November. The percentage of FHA refinances increased to 25 percent of closed loans, up 1 percentage point; the percentage of conventional refinances increased to 47 percent of closed loans in December, up from 45 percent the month prior.

“As we closed out 2017 we saw an increase in the percentage of refinances due to seasonality as fewer purchases take place in the fourth quarter, and likely homebuyers were taking advantage of the mortgage deductibility limit before it decreased to $750,000 on December 15th,” said Jonathan Corr, president and CEO of Ellie Mae. “We probably can also attribute some of the increase in closing rates to last-minute efforts by borrowers to close loans before the tax changes took effect.”

Ellie Mae reported closing rates increased across the board, with closing rates on all loans increasing from 70.9 percent to 71.2 percent. Closing rates on refinances increased from 65.1 percent to 65.6 percent; closing rates on purchases increasing from 75.5 percent to 76.1 percent. Closing rates also increased across FHA, conventional and VA loans for both purchases and refinances.

Other data from the December report:

–The percentage breakdown of all closed loans remained steady with conventional loans at 66 percent, FHA loans at 20 percent and VA loans at 10 percent.

–Closing time for all loans increased slightly to 44 days, up one day from Novbemer.

–30-year interest rates increased to 4.280 from 4.240 in November.

–The percentage of adjustable-rate mortgages held steady at 5.6 percent.