Lending

The new normal: Time to close settles at 46 days

Ellie Mae report suggests TRID issues are calming down

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After rising, falling, and rising again in the wake of the implementation of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosure rule, the time to close a mortgage loan appears to finally be settling into a new normal – about a month and a half.

Early on, the average time to close a loan increased from 46 days in October 2015, when TRID took effect, to as high as 50 days in January of this year.

That trend reversed itself in February, and especially in March, when the time to close fell back to a 12-month low of 44 days.

But then in May, the time to close rose to 45 days, before increasing again to 46 days in June, where it held steady in July.

And according to the latest Origination Insight Report from Ellie Mae, the time to close a loan was also 46 days during the month of August, marking three straight months of the time to close coming in at 46 days.

Ellie Mae’s report, which is pulled from a “robust” sampling of approximately 75% of all mortgage applications that were initiated on Ellie’ Mae’s Encompass system, typically shows a variance in the time to close for refinance mortgages versus purchase mortgages, but it appears that gap is calming down as well.

For example, the average time to close a refinance was 48 days in July, compared to 46 days for a purchase mortgage. In June, a refinance closed in an average of 47 days, again compared to 46 days for a purchase mortgage.

The gap was even more significant in March, when the time to close a refinance loan was 41 days, while the time to close a purchase loan was 45 days.

But now, August’s data shows that both refinance and purchase mortgages are closing in an average of 46 days.

Ellie Mae’s report also showed that the percentage of mortgages that were refinances climbed to the highest level since March.

According to Ellie Mae’s report, 43% of all loans closed in August were refinances, an increase over July, when only 37% of the loans closed were refinances.

Ellie Mae’s report also shows a decrease in the share of loans insured by the Federal Housing Administration. According to Ellie Mae’s report, only 20% of the loans closed in August were FHA loans. That’s the lowest percentage of FHA loans since at least April of last year.

Conversely, the share of conventional mortgages increased to 68%, the highest that share has been since at least April 2015 as well.

Perhaps it’s not surprising then that the average FICO score for all closed loans was 731 for August, the highest that number has been since March 2015.

Ellie Mae’s report also provided more proof that of the continued historic lows in mortgage interest rates — as the average interest rate on a 30-year, fixed-rate mortgage that closed in July was 3.77% — the lowest that figure has been since May 2013.

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