Interest rates on mortgages in July reached their highest levels since the fall of 2014 in what may be anticipation of the Federal Reserve’s long-awaited rate increases, according to new industry data released Wednesday.
The average rate on a 30-year fixed-rate mortgage rose to 4.29% last month, up from 4.12% in June and its highest level since October 2014, when the average rate was 4.37%, says the latest Origination Insight Report released this week by Ellie Mae (NYSE: ELLI), a provider of software solutions and services for the residential mortgage industry.
“Mortgage rates appear to be rising in anticipation of the Federal Reserve’s first rate increase since the global financial crisis,” said Jonathan Corr, president and CEO of Ellie Mae, in a written statement. “However, credit availability appears to be broadening, which is certainly good news for consumers and the housing market.”
The Ellie Mae data also showed that lenders’ share of purchase loan volume climbed up to 63% in July, an increase of 22 points since February. Additionally, nearly two-thirds of loan applications (66.2%) closed in July, which Ellie Mae notes is the highest level since it began tracking this data in August 2011.
Additional findings from the July report revealed the average closing period for all loans held steady at 48 days after climbing four consecutive months; and purchase loans as a share of lenders’ conventional loan volume continued to climb, rising three percentage points to 54%—the highest level in nearly a year.
Despite the higher rates, the average FICO score on closed loans fell for the third consecutive month in July to 725, its lowest level since February 2014.
The Origination Insight Report mines its application data from a sampling of approximately 66% of all mortgage applications that are initiated through Ellie Mae’s Encompass mortgage management solution. Last year, Ellie Mae notes that approximately 3.7 million loan applications ran through the Encompass platform.
“Given the size of this sample and Ellie Mae’s market share, the company believes the Origination Insight Report is a strong proxy of the underwriting standards that are being employed by lenders across the country,” Ellie Mae stated in the report.
Written by Jason Oliva