The average interest rate for 30-year, fixed-rate mortgages rose to a 16-month high in February, according to the new data from Ellie Mae.
Ellie Mae’s Origination Insight Report for February, pulled from a “robust sampling” of approximately 75% of all mortgage applications initiated through Ellie Mae’s Encompass mortgage management solution, showed that the average interest rate on closed 30-year fixed loans in February was 4.36%.
That’s the highest that figure has been since October 2015.
The increase in interest rates also depressed the refinance market, as Ellie Mae’s report showed that the share of purchase mortgages closed rose to 57% in February, compared to 43% of mortgages that were refinances.
That’s the largest that split has been since July 2016.
Broken down in more detail, the purchase share for conventional loans was 48%, while the refinance share was 52%. For Federal Housing Administration loans, purchases made up 75% of the loans closed in February, while refinances made up 25%. And for Department of Veterans Affairs loans, the breakdown was 65% purchase and 35% refinance.
Overall, conventional loans made up 63% of all closed loans in February, the lowest that figure has been since October 2015. Conversely, the FHA share of loans rose to 23%, the highest that figure has been since July 2016. VA loans made up 10% of all loans, and loans classified as “other” made up the remaining 4%.
Ellie Mae’s report also showed that the average time to close a loan fell from 51 days in January to 46 days in February, which is the lowest that figure has been since August 2016.
Similarly, the time to close a refinance dropped to 47 days from 53 days the month prior, and time to close a purchase dropped to 45 days, down from 48 days in January, Ellie Mae’s report noted.
Ellie Mae’s report also showed that average FICO scores dropped in February with the average FICO score on all closed loans coming in at 720.
Conventional refinance FICO scores dropped to 728 in February, down from 732 in January. FHA refinance FICO scores dropped to 649 in February, down from 651 in January.
VA refinance FICO scores dropped five points to 702 in February. FICO scores on purchases stayed consistent from the month prior with FHA purchase FICO scores at 686, conventional purchase at 752 and VA purchase at 707.
Ellie Mae’s report also showed that closing rates for all loans fell to 70.6% from 72.2% in January. Refinance closing rates decreased to 65.4%, down from 67.9% the month prior, and purchase closing rates decreased from 76.8%in January to 75.9% in February.
“The purchase market led the way in February, representing 57% of total closed loans,” said Jonathan Corr, president and CEO of Ellie Mae. “Along with the growing purchase market, we’re seeing the time to close all loans decrease and FICO scores decline, trends that we will continue to watch in the coming months.”
