The housing finance market continues to normalize in the way of TRID and Brexit related delays. The average delay in time-to-close (TTC), the time from when a sale goes under contract to settlement, eased from 3.4 days in September to 2.8 days in October. Furthermore, the moderation was driven by a shift from settlements that took more than 45 days to those that took less than 30.
Delays jumped following Brexit as the decline in mortgage rates spurred a refinance boom relative to a fixed number of lenders, underwriters, appraisers, and closing agents. At the same time, the sharp drop in rates interacted with the new TRID or Know Before You Owe rules. Under the new rules, a rate change greater than 0.125 percent that occurs within three days of closing can force lenders to re-issue the closing disclosure (the new document that replaced the HUD-1) and wait an additional three days.
Even though rates remained low through the end of summer, lenders adjusted to the work load and the number of potential refinances declined. As a result, delays continued to ease in October. Rates rose sharply following the election which will likely cause a further drop in refinances allowing lenders more time and resources to devote to the purchase market. Consequently, delays should continue to trend downward through winter.