Rising mortgage rates boost purchase loan share to new high
Higher interest rates on home mortgages drove the share of loans used to purchase houses rather than refinance to new heights in May.
Purchases represented 70% of closed loans last month, the highest level ever seen in the history of loan origination system provider Ellie Mae's survey. Ellie Mae started the survey in 2011.
"The start to the summer home buying season is in full swing and while inventories remain tight, we're seeing an increasing percentage of purchase loans," Jonathan Corr, president and CEO of Ellie Mae, said in a press release.
The purchase share was up four percentage points from April and two percentage points from a year ago.
The average 30-year fixed mortgage rate set another survey-record high in the past month when it rose to 4.84% from 4.79% in April and from 4.33% a year ago. The share of adjustable-rate mortgages in the market remained at its highest level since June 2014 at 6.6%, up from 6.1% a year ago.
Most underwriting indicators remained largely stable during the past month, and credit scores tightened slightly for the fourth month in a row.
The average FICO credit score recorded by lenders using Ellie Mae's system was 724, up from 723 in April and a year ago. The average loan-to-value ratio matched April's at 79% and was down just slightly from 80% in May of last year.
Closing times also remained steady, clocking in at 41 days for the third consecutive month, down slightly from 42 days a year ago.
The rate at which loans closed was slightly higher in May at 70.2%, up from 69.5% in April and 69.4% a year ago.