The percentage of closed conventional refinances with loan-to-value ratios of 95% or more declined for a third straight month to 7.74% in August from 8.7% in July, indicating that HARP 2.0 activity is slowing, according to mortgage technology firm Ellie Mae.
It’s “a possible sign that HARP 2.0 continues to be cooling off, which is in line with what the Federal Housing Finance Agency has been reporting,” Ellie Mae Chief Operating Officer Jonathan Corr said.
In May, mortgages with loan-to-value ratios of at least 95% experienced a refinancing spike.
Ellie Mae mines data from a sampling of about 33% of all mortgage applications initiated on its origination technology platform. Mortgage originators use Ellie Mae's Encompass360 software for about 20% of the nation's mortgages.
The firm found that the August closing rate for purchase loans increased for the fourth month in a row up to 60.1% from 58.7% in July, a sign that the purchase market is gaining traction.
The closing rate for refinances also increased, to 40.9% in August from 37.9% in July, and the time to close these refinances grew from 48 to 51 days.
After reviewing a sampling of loan applications initiated 90 days prior to August (May), Ellie Mae found that 47.8% of all applications closed in August compared to 45.8% in July.