The average time to close on a mortgage has decreased for a fourth consecutive month to 51 days, according to a new study from ICE Mortgage Technology.
The study, ICE’s Origination Insight Report, also found April to be the second consecutive month of slowdown in share of refinances among total originations, dropping to 56% from 63% in March. The percentage of purchase mortgages increased to 43% of total closed loans. That’s the highest share since August 2020, and up sequentially from 36% in March.
Data for the study was derived from approximately 80% of all mortgage applications that were initiated on ICE’s Encompass platform.
The average interest rate for all loans was 3.22% in April, the report found — up from 2.99% in March. The average interest rate for all loans was 3.48% in April 2020.
Joe Tyrrell, ICE president, said the recent findings align with the company’s 2020 Borrower and Lender Insights Survey, which noted that digital mortgage technologies are making closing a mortgage loan “faster and easier.”
“The decrease in average time to close is not surprising, given the increase we have observed in the adoption of digital transformation tools, such as AIQ — our artificial intelligence offering that automates workflows for shifting to a more data-driven process — and consumer engagement suite for automating communication to all parties in the transaction,” Tyrrell said.
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ICE reported an overall closing rate of 78% in April, with the amount of FICO scores used on first-time lean loans at 747. ICE found that conventional loans comprised 81% of originations in April, while FHA loans were 10% and VA loans were just 6%.
Purchase mortgages on average took 49 days to close in April. That’s better than the 51 days it took in March, but worse than the 48 days in October 2020 and the 46 days one year ago in April 2020.
Loan officers and mortgage executives have told HousingWire that long lead times with appraisers, inspectors and other elements of the home purchasing process have significantly contributed to such delays, moreso than general capacity issues from the lender.
ICE acquired Ellie Mae for $11 billion in 2020, and has been a serious player in the mortgage tech space over the last five years — particularly with M&A. The company acquired a majority equity position in MERSCORP Holdings, the owner of Mortgage Electronic Registration System in 2016, and purchased the remaining stake two years later. ICE also acquired Simplifile in 2019 for $335 million.