St Casimirs Mortgage Minute

Mortgage Refis Return as Interest Rates Plummet

Banks are feeling the pressure of declining long-term bond yields, but a potential bright spot is that lower rates are prompting more people to refinance mortgages or buy homes. Wells Fargo said on June 16 that it expects mortgage volume across the industry to rise 20 percent to 25 percent more for the year than the $1.5 trillion it initially forecast, and JPMorgan Chase said industry volume could surpass its initial forecasts by 50 percent. Observers note that the pickup in refinancing has been a surprise, as many expected mortgage rates to rise after the Federal Reserve's rate increase in December. It emphasizes the unpredictability of the mortgage market, as banks have found it difficult to anticipate loan demand and staffing levels. Wells Fargo has hired another 1,500 mortgage consultants since Jan. 1, and Chase has added several hundred employees, mostly in originations. However, it remains to be seen how aggressively banks will try to boost refinance and purchase volumes and how disciplined they will remain on holding the line on profitability within their mortgage businesses. Chase, Wells Fargo, and U.S. Bancorp have said they do not plan to lower minimum credit scores to drive up volume.

From "Mortgage Refis Return as Interest Rates Plummet"
Wall Street Journal (06/17/16) Andriotis, AnnaMaria; Glazer, Emily

Ellie Mae: Purchase Mortgages Now Make Up More Than 60 Percent of Closed Loans

Ellie Mae's latest Origination Insight Report shows that purchase mortgages accounted for 62 percent of all closed loans in May, marking the first time since August 2015 that the figure has surpassed 60 percent. This marks a gain from 59 percent in April. Meanwhile, refinances accounted for 37 percent of all closed loans, down from 40 percent in April. The report also shows that overall time to close rose from 44 days in April to 45 days in May, holding steady at 45 days for purchase loans, 44 days for refinances, and 45 days for Federal Housing Administration (FHA) loans. Closing rates for all loans climbed from 69 percent in April to 70 percent in May, rising from 65 percent to 67 percent for refinances and from 73 percent to 75 percent for purchase loans. Borrowers with FICO scores of at least 700 accounted for 69 percent of all purchases and refinances. The report also shows that 31 percent of purchase loans and 27 percent of refinances had FICO scores between 600 and 699. In addition, 82 percent of conventional loans and 39 percent of FHA loans had scores above 700.

From "Ellie Mae: Purchase Mortgages Now Make Up More Than 60 Percent of Closed Loans"
HousingWire (06/15/16) Ramírez, Kelsey