Refinance loans saw more closings than any other mortgage loan in January, with refis representing 45 percent of all closed loans, according to the monthly Origination Insight Report published by Ellie Mae on Wednesday.
The percentage of FHA refinances increased to 28 percent of closed loans, up 3 percentage points, and the percentage of conventional refinances increased to 51 percent of closed loans in January, rising 4 percentage points over the prior month, the report indicated.
“As we ring in 2018, we see refinances rise as a percent of overall loan volume, something that we have seen every January since we began reporting this data,” said Jonathan Corr, President, and CEO of Ellie Mae.
However, Ellie Mae expects this surge to taper off to industry projected levels in the coming months. “Our expectation is that the percentage of refinances will taper back off to industry projected levels of 25 to 30 percent in the coming months as the purchase market resumes its momentum,” Corr said.
The report indicated that 30-year mortgage interest rates in January rose to 4.33 from 4.28 while the percentage of closed ARMs dipped slightly from 5.5 percent to 5.6 percent in the prior month.
The effect of these rising rates was evident in January as closing rates across the board decreased slightly. According to the report, closing rates on all loans decreased from 71.2 percent to 70.9 percent. Closing rates on refinances dipped slightly from 65.6 percent to 65.5 percent and closing rates on purchases decreased from 76.1 percent to 75.7 percent.
Sixty-nine percent of all closed loans had FICO scores of over 700, the report said. Of these, 70 percent of purchase loans and 66 percent of refinances had FICO scores over 700. The average FHA purchase FICO score held steady at 680 in January, while the FHA refinance FICO scores held steady at 645. Conventional refinance FICO scores held steady at 730, and conventional purchase scores held steady at 751.