Ellie Mae’s Origination Insight report for October demonstrates some of the side effects of the historically low mortgage rates we’ve seen in 2020: incredibly high volume and an increase in time-to-close.
Across the board, 30-year mortgage rates decreased on average from 3% in September to 2.99% in October, continuing this year’s trend of low rates. The 30-year conventional dropped from 3.02% to 3.01%, and VA fell from 2.78% to 2.75%. FHA loans remained the same, holding steady at 3.01% in October.
From September to October, the average time to close all loans increased from 51 to 54 days, with the average time to close a refinance increasing from 54 to 57 days and average time for a purchase climbing one day to 48 days. That’s a little more than 6 weeks for people trying to move into a house.
Time to close has been creeping up since the lows seen in March when shut-downs started happening. Refis now take 22 days longer in October than they did back March.
The number of closed loans increased 7.1% over September, per Ellie Mae. Seasonally, October over September for 2019, 2018, 2017 were up 4.8%, up 9.9%, and up 5.6% respectively.
The number of conventional loans increased in October to 82% – up from 80% in September. Overall loan applications are down 9.3% from September. FHA loans held steady at 10% between the two months, while VA loan numbers dropped from 6% to 5%.
Numbers throughout the industry are favorable for buyers, though, when compared to the months before the COVID-19 pandemic forced an economic shutdown. In February, 30-year rates sat at an average of 3.86%.
The average FICO score on all closed loans remained at 753 in October, unchanged from the month prior. LTV stayed at 73 and DTI decreased to 23/35.
FHA refinance FICO scores held at 679 for the second consecutive month, and conventional refinance FICO scores decreased one point to 766 in October. VA refinance FICO scores decreased to 736 in October, down from 738 in September.