Purchase loan closing times shorten for fourth straight month

Lenders cut mortgage closing times for the fourth consecutive month in April, inching closer to pre-pandemic levels.

The average days to close dropped to 51 from 52 in March but remains elevated from the year-ago average of 42, according to ICE Mortgage Technology.

Closing times for purchase mortgages showed the most improvement, with the average borrower closing on a home purchase in 49 days, down from 51 days month-over-month while up from 46 days year-over-year.

The adoption of automation and digital processes will play a large role in further reductions going forward, said ICE president, Joe Tyrell.

“The decrease in average time to close is not surprising, given the increase we have observed in the adoption of digital transformation tools,” Tyrrell said in the Origination Insight Report. “Digital mortgage technologies are making it faster and easier to close a mortgage loan, thus improving the overall experience for participants.”

Refinance closing times rose to 53 days in April from 52 in March and 39 the year prior. As the traditional home buying season got underway, April’s split of loans shifted to 43% purchase, 56% refinance. That’s a more balanced ratio than March’s 36% purchase and 63% refinance shares and April 2020’s 35% purchase and 65% refinance during the first full month of the pandemic’s impact.

With interest rates expected to grow through 2022, the purchase share could keep increasing as borrowers lose incentive to refi. Expanded credit also tips the scale in favor of purchase mortgages. The average FICO score fell to the lowest level in 13 months, hitting 747 in April from 751 in March and 749 a year earlier. That aligns with a two-month rise in credit availability, according to an analysis by the Mortgage Bankers Association.