The market share of adjustable rate mortgages reached 9.2 percent—a high watermark for 2018.

This percentage is up from 8.9 percent the month prior and from the 2018 low of 5.5 percent, according to the December “Origination Insight Report” from Ellie Mae. Also, the share was the highest since Ellie Mae began tracking the data in 2011.

[caption id="attachment_9349" align="alignright" width="198"] Jonathan Corr[/caption]

“With the strong demand for housing and the rapid increase in property value appreciation, more consumers are turning to adjustable rate mortgages to gain additional flexibility when competing for a home,” said Jonathan Corr, president and CEO of Ellie Mae. “This is another key indication of how demand has outpaced supply in the housing market as consumers pursue their dream of homeownership.”

The popularity of ARMs can be correlated to the 30-year rate, which rose to 5.17 percent for all loans closed in December, up from 5.15 percent in the same period one month earlier. For Federal Housing Administration loans, the 30-year rate increased to 5.2 percent, conventional rates increased to 5.19 percent and Veterans Affairs rates increased to 5.01percent.

Other statistics from the report are as follows:

• The time to close all loan types increased to 47 days in December, up from 46 days in November. Time to close a purchase loan decreased to 47 days, while time to close a refinance increased to 44 days.
• The percentage of purchase loans rose to 71 percent of total loans in December, up from 70 percent the month prior.
• Overall FICO scores dropped one point to 726. Loan-to-value remained at 79 for the fifth month and debt-to-income held at 26/39.

The report is based on data from around 80 percent of mortgage applications that were initiated on the Encompass solution.