Loans in December are taking longer to close than any month since February 2013, according to the latest Origination Insight Report released by Ellie Mae, a provider of innovative on-demand software solutions and services for the residential mortgage industry.
Overall, loans closed in December at an average of 49 days. That’s the longest average time since it took 50 days on average to close loans in February 2013, according to the report. At that time, a seven-month stretch from August 2012 through February 2013 showed average closing times range from 49 to 55 days.
For purchase loans, the time is even longer. Purchase loans closed in December at an average of 50 days, which is one day longer than November 2015, eight days longer than December 2014, and a full 12 days longer than August 2014.
Only two other months, since the Origination Insight Report began tracking data in August 2011, has purchase loan closing times reached 50 or more days – in December 2012 and January 2013, when it was 51 days in each month.
“While our customers are certainly impacted by the Know Before You Owe changes, we’ve been providing them with resources, training and tutorials to help mitigate the effects,” Ellie Mae President and CEO Jonathan Corr said in a news release. “And while the time to close loans remained consistent from November, the 49-day cycle is still a week longer than the time to close at this same time last year.”
The average time to close a refinance in December fell from 49 days to 47 days. The average time to close FHA and conventional loans remained largely unchanged at 49 days, while VA loans increased from 50 to 52 days.
In terms of loan purpose, purchases represented 56 percent of all closed loans while refinances as a percentage of lenders’ overall loan volume decreased for the first time in seven months from 46 percent in November to 43 percent in December.
Ellie Mae’s data also shows that the average FICO score on closed loans increased for the first time since May from 720 in November to 722 in December, while the average FHA refinance FICO score increased to 651, up from 648 in November.
Closing rates for all loans remained high at 67 percent in December, dropping slightly from 68 percent in November, with November’s results representing the highest percent in all of 2015. Closing rates on refinances reached their highest point of the year at 63 percent in December, while closing rates on purchases dropped slightly from 72 percent in November to 71 percent in December.
Other findings from the December report:
- The average 30-year rate for all loans increased slightly to 4.26.
- The conventional purchase closing rates climbed above 72 percent for the first time since we began tracking data in August 2011.