A recent report from the Mortgage Bankers Association showed that the refinance share of mortgage applications fell to the lowest level since September 2008 during the month of May.
Now, a new report from Ellie Mae shows the results of the lack of refinance applications on mortgage originations.
According to the Origination Insight Report from Ellie Mae, which covers May, purchase mortgage originations in May made up a higher percentage of overall originations than in any month since Ellie Mae began tracking the data in 2011.
Ellie Mae’s report showed that purchase originations made up 68% of all closed loans in May, a 3% increase from April.
That share is a record high, according to Ellie Mae President and CEO Jonathan Corr.
“The start of the peak summer home buying period combined with fewer refinances due to higher interest rates, drove purchases to the largest percentage of total loans since we began tracking data in 2011,” Corr said.
Freddie Mac’s report on mortgage rates showed that rates hovered right around 4% during May, while Ellie Mae’s view on interest rates showed that interest rates on closed loans were even higher than that.
According to Ellie Mae’s report, the average interest rate on a 30-year mortgage actually decreased for the first time in 2017 in May, falling from 4.41% in April to 4.33% in May, but that’s still up from 4.06% during the same time period last year, and up from 3.81% six months ago.
Back in November, when interest rates were at 3.81%, the share of refinances was nearly 50% of all mortgages – 47% to be exact.
The dramatic shift can be seen in conventional mortgages specifically, as back in in November refinances made up 58% of the originations with purchases making up the remaining 42%.
In May, those figures were totally flipped, with refinances making up 39% of the originations and purchases making up 61%.
The news on refinances isn’t all bad though, as applications for refinances are on the rise, with the latest data showing that refinance share of mortgage activity increased from 45.4% of total applications last week to 46.6% this week.
Ellie Mae’s report also showed that the time to close a loan held steady at 42 days in May.
That’s more than a week faster than January’s average of 51 days. For a look at that trend over time, click here.