Closing rates hit new record, FICO scores reach three-year high
As mortgage rates dip lower and lower through home buying season, the rate of closing loan applications keeps climbing, according to Ellie Mae's Origination Insight Report.
The mortgage closing rate reached its highest level since the report's inception in February 2012, rising to 75.6%. It increased from 70.2% year-over-year and 74.8% from April.
Average FICO scores across all loan types stayed static at 728 from last month and grew from 724 a year ago. This is the highest average score since 730 in October 2016.
The average 30-year note rate dropped to 4.52% in May from 4.84% the year before and from 4.61% in April, marking the fifth consecutive month-over-month decline. May's share of mortgage refinances edged up two percentage points annually to 32%, while dropping three points from April's level. The purchase share made up 68% for the month, falling from 70% the year before and up from 65% last month.
"As the 30-year note rate declines for yet another month, we are seeing purchase and refinance activity on the rise," Jonathan Corr, president and CEO of Ellie Mae, said in a press release. "Closing rates remain well over 75% and with the Mortgage Bankers Association reporting solid purchase volume and new inventory on the rise, we could be in for a very robust summer home buying season."
The time to close on a mortgage hiked to 42 days from 41 the year before and from April's 40. While both purchase and refinance loans had month-over-month closing time increases, refis jumped to 37 days from 33.
Data from the Origination Insight Report analyzes approximately 80% of mortgage applications initiated through the company's Encompass platform. To calculate an overall closing rate, the loan applications sampling is initiated 90 days prior.