Welcome back to iLeads Mortgage Market Minute, where we bring you the latest, most relevant news regarding the mortgage market. We hope you enjoyed last week’s edition where we talked about 30-Year Mortgage Rate Tracked by MBA Drops Below 3%. This week we’re bringing you:
Closing Times Improve But Pull-Through Falls -Origination Insight Report*
Purchase loans finally regained the catbird seat in June, edging out the share of refinance loans by 3 percentage points. ICE Mortgage Technology reports that 51 percent of all mortgages originated during the month were for home purchases. This is the first time since December 2019 that purchases eclipsed refinances in the ICE Origination Insight Report. Refinances made up 48 percent of the total while other types of loans had 1 percent of the volume.
Refinances still made up the majority of conventional loans, 53 percent versus 46 percent for purchases. For FHA and VA loans the purchase share was 79 percent and 70 percent respectively.
Conventional loans accounted for 78 percent of all originations during the month, down from 79 percent in May. The shares of FHA and VA loans were unchanged from the prior month at 11 percent and 7 percent.
“While we are still seeing a strong refinance market, including the continued growth of cash-out refinances, the traditional summer purchase market is clearly evident in the data,” said Joe Tyrrell, President of ICE Mortgage Technology. “These numbers are a testament to the strong and resilient demand for homeownership.”
The average note rate for 30-year loans closed during June was 3.22 percent. The rate was 3.27 percent in May.
The ICE report also notes that the average time to close all loans decreased to 49 days from 53 days in May. The average time to close a refinance was 48 days compared to 55 days the previous month but the average time to close a purchase increased by one day to 51 days.
CoreLogic: No Foreclosure Wave in Sight*
While the national delinquency rate has not returned to the 3.5 percent rate it had reached before the onset of the pandemic, CoreLogic says the percentage of loans 30 or more days past due has declined 2.6 points since May 2020. The company says the rate in May 2021 was 4.7 percent compared to 7.3 percent in May of last year.
Frank Martell, president, and CEO of CoreLogic says, “The pandemic has created many challenges but, in the case of delinquencies, the impacts have been relatively muted thanks to numerous government support programs and the sharp snapback in economic activity over the past several quarters. Looking forward, we expect a robust economy and near-zero interest rates to hold delinquency levels at reasonable levels.”
Early-stage delinquencies, those homeowners 30 to 59 days past due on their payments, and adverse delinquencies, 60 to 89 days past due, account for most of the year-over-year decline. The earlier bucket, which represented 3.0 percent of all mortgage loans in May 2020 had dropped to 1.2 percent by May of this year while the adverse delinquency bucket has improved from 2.8 percent to 0.3 percent.
Seriously delinquent loans, those 90 or more days past due including those in foreclosure, are still elevated at 3.2 percent compared to 1.5 percent a year earlier, but this is still the lowest rate since June 2020. Serious delinquencies peaked at 4.3 percent in August 2020.
The foreclosure inventory, loans in process of foreclosure, is unchanged year-over-year at 0.3 percent. This is due to the continued moratorium on foreclosures of GSE and federally guaranteed loans.
In addition, fewer loans are becoming delinquent. CoreLogic put the transition rate, the share of mortgages that moved from current to 30 days past due in May, at 0.7%, down from 2.2% in May 2020.
The mortgage market moves to purchase*
Purchase made up a greater share than refis for the first time in 18 months
It had to happen eventually. For the first time since December 2019, purchase mortgages represented a higher percentage of closed mortgages than refinances.
Purchase mortgages rose to 51% of closed mortgages in June, up from 47% in May, according to the latest origination report from ICE Mortgage Technology (formerly Ellie Mae). Refinances represented 48% of closed loans.
“While we are still seeing a strong refinance market, including the continued growth of cash-out refinances, the traditional summer purchase market is clearly evident in the data,” Joe Tyrrell, President of ICE Mortgage Technology, said in a statement that accompanied the report.
The origination report found that the average time to close all loans decreased to 49 days in June, a decline from 53 days in May. The average time to close a refi decreased to 48 days from 55 days in May. Things were a bit slower in purchase – the average time to close one hit 51 days, up from 50 days the month prior.
The data show-closing rates for all loans decreased to 75.3% in June, down from 76.9% in May. Closing rates on refinances fell to 74.6% in June, down from 77% in May. Closing rates on purchase mortgages dropped to 76.3% in June, a small drop from 77% in May.
The data is based on a representative sampling of the mortgage applications initiated on ICE’s Encompass Lending Platform.
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