Last month, mortgage rates began to drop and home buyers tried to take advantage of the shift in rates.
Fortunately for them, mortgages closed near a record pace in the month of March.
It took an average of 43 days for a mortgage to close, a drop of eight days since the beginning of 2017. This is the fastest that mortgages have closed since February of 2015.
Many home buyers want a closing to happen as quickly as possible, and for whatever reason, mortgages are moving at a quick pace.
Along with the quick pace of closed mortgages, home buyers have been experiencing lower mortgage rates.
The average mortgage rate for a closed mortgage in March was 4.39%, up just three basis points (0.03%) from the previous month.
However, the increase in rates doesn’t tell the whole story. Mortgage rates began to drop off toward the end of March, so rates available to home buyers today are actually lower than those reported last month.
Combined with a quick closing time, today’s low rates are sure to offer current home buyers a good reason to step-up their home search.
Click to see today’s mortgage rates.
Home Buyers Take Advantage Of Low Rates
Every month, mortgage software company Ellie Mae tracks mortgage information from around the country. Roughly 75 percent of all mortgages go through their software, so their monthly origination report is seen as a trustworthy source for mortgage data.
Their report tracks mortgages that closed in a 90-day period, although many mortgages close much quicker than that. A closed mortgage is a mortgage that went through the mortgage application process and was approved.
According to Ellie Mae, home buyers took advantage of dropping rates and quick closing times last month.
In March, 63 percent of all closed mortgages were purchase loans, one of the highest shares in over 16 months. It was a jump of six percent from the previous month.
As a result, March also saw a drop in the total number of refinances.
Home buyers have been slow to purchase since November of last year. Not only is winter generally a slower home buying season, but it also saw rising rates.
Now that winter is over and rates have dropped, home buyers are back at it.
What’s surprising is that current homeowners aren’t taking advantage of low rates the same way that home buyers are. Anyone who currently has a mortgage could be eligible for a refinance, and with today’s low rates, it could save them big.
Click to see current refinance rates.
Mortgage Approval Becoming Slightly Harder
Low rates and quick closings dominated March, but there were also reasons for some home buyers to be concerned.
Ellie Mae reported that the percentage of mortgage applications that closed dropped from 70.6% to 67.9% over the month. This means that it was starting to get harder for home buyers to get approval for their mortgage.
A big part of this might have been the increase the average credit score that lenders approve. For all mortgage types combined, the average credit score of closed loans rose from 720 to 721. But the jump was even larger for individual mortgage types like conventional loans and FHA loans.
Credit scores aren’t just important for getting mortgage approval, but they also help home buyers get access to the lowest rates available. Those who are worried their credit might not be strong enough should try these easy tricks to boost their credit.
But the decrease in approved mortgages shouldn’t be something to worry about. There are plenty of reasons why a mortgage might not get approved, ranging from problems with reported income to someone’s debt to income ratio.
The best way to find out if you’re eligible for a mortgage is to begin the preapproval process. This will tell you about how much home you can afford.
Check your mortgage eligibility.
Ellie Mae’s Origination Insight report gives valuable information to home buyers, but the data is a collection of mortgage rates from the previous month. Currently, mortgage rates are higher than those reported.
Home buyers and refinancers looking for the lowest possible rates will want to keep their eye on rate trends.