Ellie Mae: Rising Interest Rates Spur…Refis

It appears that borrowers realize the refinance train is leaving the station.

Ellie Mae, Pleasanton, Calif., reported the percentage of closed refinances increased for the first time in 2018 to 32 percent in August, up from 29 percent in July. The company’s monthly Origination Insight report noted the average 30-year interest rate for all loans rose slightly to 4.92 percent, up from 4.91 percent in July and 4.90 percent in June. Ellie Mae President and CEO Jonathan Corr said the slowdown in rate increases is being viewed by homeowners as an opportunity to refinance.

“The rise in interest rates has slowed since June, and we are seeing the percentage of refinances increase month-over-month since May,” said Jonathan Corr, president and CEO of Ellie Mae. “This may reflect consumers taking an opportunity to refinance with the corresponding increase in equity.”

Other key report data:

–The percentage of adjustable-rate mortgages held at 6.6 percent for the second consecutive month.

–Closing rates for all loans increased to the highest percentage in 2018 at 71.1 percent in August, up from 70.9 percent in July. Closing rates on purchase loans increased to 75.9 percent, up from 75.0 percent in July. Closing rates on refinances dropped slightly to 63.5 percent, down from 63.7 percent in July.

–The time to close all loans held steady at 43 days for the second month. Time to close a purchase loan increased one day to 45 days in August.

–Overall FICO scores decreased by one point in August to 724 while LTV decreased to 79 and DTI held at 26/39.