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Posted 02/02/2017

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Home Purchases Dominate Market 21 Months Straight

Ellie Mae Origination Refinance Report Purchase Vs Refinance

Home Buyers Are Out In Force

March 2015.

That's the last month in which there were more refinancing applicants in the market than home buyers.

It's easy to see why.

Homes are still a good value. Deals can still be found from home builders and home sellers alike.

And, current mortgage rates are still low.

The National Association of REALTORS® (NAR) expects home prices to rise another four percent in 2017, after a healthy 6 percent increase last year.

That's getting home buyers' attention.

There's still "upside" in today's market, and renters are deciding to enter before home appreciation levels off.

2017 will be the year of the home buyer.

Click to see today's rates (Feb 19th, 2017)

Purchases Rule Mortgage Market 21 Months In A Row

According to mortgage origination software firm Ellie Mae, which handles approximately 3.7 million mortgage applications per year, home purchase mortgage loans accounted for 54% of all loans closed in December 2016.

It's the 21st straight month in which more mortgage applicants were buying a home than were refinancing one.

The shift is significant.

Between mid-2011 and mid-2013, refinances dominated the mortgage world. In January 2013, seventy-three percent of mortgage applicants were refinancing.

Now, refinances make up just 46% of the market.

Homes are again viewed as a "good value". Even those paying private mortgage insurance yield a 500%+ return on their PMI cost due to massive home appreciation.

The average home buyer is "making" $14,000 per year, but that's based on nationwide average values. Homeowners in many areas are making much, much more.

For example, a Portland, Oregon resident has an average home value of $358,500, and prices rose nearly 13% in 2016, according to NAR.

A homeowner in this metro, then, made over $46,000 in home appreciation in 2016.

The word is out: buying a home is once again a great investment and renters are finally getting "off the fence".

Click to see today's rates (Feb 19th, 2017)

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 in 2015, 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 December, sixty-one percent of FHA loans were for applicants with FICO scores below 700. Just 16 percent of approved conventional loans had credit scores in the same range.

Other data from the Ellie Mae report included:

  • FICOs averaged 753 on closed conventional purchases
  • FHA mortgages accounted for 20% of all loans; VA loans accounted for 9 percent
  • The typical mortgage took 50 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 December, 77% 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 (Feb 19th, 2017)

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.

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