Click To See Today's Rates

Posted 10/22/2016

Refinances Grab More Market Share Thanks To Low Mortgage Rates

Ellie Mae Purchase Vs Refinance September 2016

Homeowners Come Out In Force To Refinance

Recent mortgage rates are lowest they've been in history, and home values continue to climb nationwide.

It's no wonder that demand for home loans is rising.

Home purchases still have an edge in the mortgage market, but refinancing is climbing its way back toward the 50 percent mark.

This summer, mortgage rates plunged and rested near all-time lows. Since then, home refinance applicants have gained ground on purchase applicants.

It's a very good time to be shopping for a refinance or home purchase mortgage.

Click to see today's rates (Dec 10th, 2016)

Low Mortgage Rates Spur Purchase, Refinance Activity

According to mortgage origination software firm Ellie Mae, which handles approximately 3.7 million mortgage applications per year, refinance mortgage loans accounted for 37% of all loans closed in September 2016.

Refinance volume is much higher than it was in January, too, and there are two main catalysts.

The first catalyst for rising refinance activity has been rising home values.

Home values were up more than five percent last year, and are now higher by more than 30% from the market bottom, set in 2012.

In many U.S. cities, home valuations have nearly doubled.

When home values rise, refinancing becomes easier for homeowners not using underwater loan programs such as the HARP 2 loan. It's also easier for homeowners with existing FHA loans to cancel FHA MIP.

Cash-out refinance loans are also on the rise after several down years.

The second cause of the refinance boomlet is that today's mortgage rates have given U.S. households incentive to refinance.

When mortgage rates are low, there's a potential to save big money.

Today, there are potentially more than 8.7 millions households eligible to refinance, with more than 1 million of them in the money for a refinance.

"In the money" is defined as having a mortgage rate more than 150 basis points (1.50%) above today's rates; plus having sufficient home equity to qualify.

Today's mortgage rates are in the low-3s and banks are quoting equally-low APRs. Some homeowners are getting rates in the twos.

Refinance loan volume remains strong.

Click to see today's rates (Dec 10th, 2016)

Applicants Getting Mortgage-Approved At Record Levels

The most recent Ellie Mae Origination Insight Report provides a good look at today's typical loan approval, and the makeup of today's mortgage applicants.

As one example, buyers with FHA loans are making a four percent downpayment, on average; and they are getting approved with slightly lower credit scores as compared to last year.

Today's FHA buyers carry an average FICO of 686.

This is interesting because lenders have aggressively lowered their minimum FHA credit score requirements last year, with some lenders now allowing FICO scores as low as 580 FICO in order to get approved.

Despite lender willingness to make loans to borrowers with below-average credit scores, the typical FICO score of an approved mortgage borrower is steady.

But, FHA remains the go-to choice for home buyers with less-than perfect credit.

In September, fifty-nine percent of FHA loans were for applicants with FICO scores below 700. Just 14 percent of approved conventional loans had credit scores in the same range.

Other data from the Ellie Mae report included:

  • FICOs averaged 754 on closed conventional purchases
  • FHA mortgages accounted for 20% of all loans; VA loans accounted for 9 percent
  • The typical mortgage took 48 days to approve

However, the most noteworthy statistic from the Ellie Mae report was the one which showed more mortgage applicants getting approved than during any period this decade.

In September, 76.4% of purchase loan applications got "closed", which marks a huge increase 2014's average rate of 63 percent.

This statistic refutes the general belief that "mortgages are tough to get". The opposite is true.

The Ellie Mae report shows that mortgages are easier to get than they've been in years. Lenders are loosening requirements and a variety of new low- and no-downpayment loans have reduced the hurdles to homeownership.

What Are Today's Mortgage Rates?

With mortgage rates low, demand for mortgage loans is high. And, with lenders approving a growing percentage of loans, the time to apply is today.

Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Click to see today's rates (Dec 10th, 2016)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

3 Testimonials

Barry L. Systems Analyst

The Mortgage Reports is an excellent resource. I depend on the Mortgage Reports for the most up-to-date information regarding shifts in government policy and mortgage rate information in general.

Michael J. Network Engineer

The Mortgage Reports is one of the most accurate, detailed, and informative sources of mortgage-related information on the internet.

Ricardo P. Project Manager

The Mortgage Reports is awesome. The site is extremely helpful, keeps you up-to-date, and puts you ahead of the game. Add The Mortgage Reports to your reading list!

2016 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)