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Purchase Origination Higher Than Refi’s

In its most recent Origination Insight Report, Ellie Mae describes the current state of the purchase mortgage market. The market was split with refinancing accounting for 33% of the market and purchase origination accounting for 66%. More than 4/5 of FHA loans were purchase originations, compared to 3/5 of conventional loans. The average FICO score of approved loans was 727, while the average debt-to-income ratio was 24/37 with a loan-to-value of 81%.

About the Purchase Mortgage Market
The purchase mortgage market includes all home financing transactions. The two components of the purchase mortgage market are original purchases and home refinances. The purchase mortgage market is growing as the country recovers from the recession, and home prices are increasing due to lower supply and higher demand. An increase in home prices leads to more purchase originations, since people have more equity in their old homes and are better able to buy a new one.

Purchase Originations Gaining on Refi’s
The values represent a trend of increasing emphasis on purchase originations compared to refinances. The April 2014 report found purchase originations and refinances at 63% and 37%, respectively, while the May 2013 report’s respective figures were 58% and 42%. The pull-through rate was 57.8%, which was an increase over the value of 55% in April.

Origination Insight Report
Ellie Mae releases a monthly Origination Insight Report, with each report including data from the previous 90-day cycle. To generate the report, the mortgage software solution provider considers data from 3.5 million loan applications from throughout the country that provide a representative sample of the nation’s loan applications. Statistics in the report are derived from the loan applications that are approved or denied.

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