Closing rates for all loans in December hit their highest point of 2016, according to Ellie Mae’s Origination Insight Report.
Closing rates for all loans increased to 73.2% in December. While refinance closing rates increased from 68.7% in November to 69.6%, purchase closing rates increased from 76.1% in November to 77% in December.
As more loans closed, the market also shifted slightly away from refinances and towards purchase loans. With the increase in interest rates, the total number of refi originations shrank to 46% in December, down from 47% the previous month.
But the purchase origination market remained strong, increasing to 54% of all closed loans. That is up from 53% in November, and Ellie Mae says the purchase origination share will only continue to increase in 2017.
“As rates began to increase we saw purchases tick back up in December, signaling the start of a trend we expect to continue into 2017,” Ellie Mae president and CEO Jonathan Corr said. “We also saw closing rates rise to the highest percentage in 2016 as homebuyers locked in rates and lenders closed loans before the conclusion of the year.”
Following last month’s uptick, the time to close a loan continued its increase in December, increasing from 49 days in November to December’s 50 days. Time to close a refinance increased to 52 days while time to close a purchase loan increased to 48 days, both an increase of one day from the previous month.
The average FICO scores on approved loans decreased in December, possibly signaling that the credit box is loosening. Average FICO scores slipped down to 726 from 728 in November. Conventional purchase FICO scores held steady at 753 for the third month in a row while conventional refis decreased from 743 in November to 739 in December.
FHA purchase FICOs also stayed the same at 686 and refinance FICO scores increased one point to 655 in December. CA purchase FICO scores decreased to 707, down from 709 in November and VA refinance FICO scores decreased one point to 709 for the month.