Refinance volumes gained mortgage market share for a fourth straight month in November as interest rates continued to trend downward.
Out of a sample of closed loans drawn from Ellie Mae's origination platform last month, 45 percent were refinances, the company reported Wednesday. November's refinance share marked a 5 percentage point increase from October and was the same as a year ago.
Since bottoming out at 32 percent in July, the refinance slice of the market has steadily grown bigger in the past few months, owing to a continued drop in mortgage rates to their lowest levels in more than a year. For November, Ellie Mae reports the 30-year fixed-rate mortgage came in with an average interest rate of 4.3 percent, down from 4.4 percent in the October survey and 4.5 percent last year.
"Winter is normally a slow time for housing sales, yet the increase in refinancing volume is protecting many lenders from the cold," said Jonathan Corr, president and COO of Ellie Mae. "Meanwhile, lower interest rates and the return of the GSEs' three-percent down payment loan programs may help lenders and homebuyers get off to a great start this New Year."
Going by application numbers, refinance volumes look promising for December. The month kicked off with a 13 percent week-over-week increase in refinance applications, followed by a week of flatness, according to the Mortgage Bankers Association.
In addition to refinance share pushing higher, mortgage closing rates were also up in November, Ellie Mae said. The total closing rate for all loans last month (based on applications filed 90 days prior) was 60 percent, the highest since August. Closings were up for both refinances, which picked up to 51.2 percent, and purchase loans, which rose to a survey high of 66.5 percent.
The time it took to close a loan fell slightly in November, averaging 39 days. For a refinance, the average closing time was 37 days, down from 39 in October, while the average time for purchase loans was 41 days, up from 40.
Credit standards were slightly tighter for closed loans compared to October, with the average FICO score rising three points to 729 and the average approved loan-to-value ratio dropping slightly to 80 percent.
For denied applications, the average FICO was 678 in November, down from 681 the month prior, while the average loan-to-value ratio was 79 percent.
In a survey covering June 2013–June 2014, the Office of the Comptroller of the Currency reported mortgage underwriting standards were unchanged in the last year at 70 percent of lenders, with 20 percent reporting more stringent requirements.
Meanwhile, a survey of lenders conducted by Fannie Mae for the fourth quarter found fewer lenders have tightened their standards in the last few months. The vast majority expect they'll keep their criteria the same heading into early 2015.