Adjustable-rate mortgage share grows along with demand: Ellie Mae
Adjustable-rate mortgages for the second consecutive month hit a post-crisis high, due to strong demand for housing being constrained by a lack of supply, according to Ellie Mae.
The average interest rate for all loans closed in December was 5.17%, up from 5.15% in November.
"With the strong demand for housing and the rapid increase in property value appreciation, more consumers are turning to ARMs in order to gain additional flexibility when competing for a home," Jonathan Corr, Ellie Mae's president and CEO, said in a press release.
"This is another key indication of how demand has outpaced supply in the housing market as consumers pursue their dream of homeownership."
There is likely some more growth for ARM loans as their application share was 8.3% for the week ended Jan. 18, down from 9.2% the week before, but up from 7.4% at the end of November, according to the Mortgage Bankers Association.
Mortgage rates fell over the same time frame, with the conforming fixed-rate loan at an average of 4.75% the week of Jan. 18, down from 5.07% the week of Nov. 30.
Purchase loans made up 71% of closed mortgages, tying the high for the year and up from 70% in November and 60% for December 2017. Time to close was 47 days, which was the high point for 2018, compared with 46 days in November and 44 days one year ago. But the time to close a purchase loan fell to 47 days in December from November's 48 days.