Black Knight: 550,000 Homeowners Regain Incentive to Refinance as Interest Rates Fall
Black Knight, Jacksonville, Fla., said with recent drops in mortgage interest rates, the number of homeowners with mortgages who could likely qualify for and see at least a 0.75 percent interest rate reduction by refinancing increased by nearly 550,000.
The company’s monthly Mortgage Monitor Report said as recently as October, rising interest rates put the refinanceable population at a 10-year low. Since then, said Black Knight Executive Vice President Ben Graboske, rates have fallen slightly, but even so, at 2.43 million, the refinanceable population is 50 percent lower from a year ago.
“Still, the increase does represent a 29 percent rise from that 10-year low, which may provide some solace to a refinance market still reeling from multiple quarters of historically low–and declining-volumes,” Graboske said.
Black Knight said through the third quarter, refinances accounted for just 36 percent of mortgage originations, making 2018 the most purchase-dominant market in 18 years.
“And of course, as refinances decline, the purchase share of the market rises correspondingly,” Graboske said. “Refinances have tended to perform significantly better than purchase mortgages in recent years. When we take a look back and apply today’s blend of originations to prior vintages, the impact becomes clear. A market blend matching today’s would have resulted in an increase in the number of non-current mortgages by anywhere from two percent in 2017 to more than a 30 percent rise in 2012, when refinances made up more than 70 percent of all lending.”
The report also noted flattening home price growth over the past four months led to the slowest annual appreciation rates in nearly three years. While slowing has been observed across the majority of the country, western states–led by California–are seeing the most deceleration. The annual rate of appreciation in California has slowed from over 10 percent as recently as February to less than 5 percent as of October, falling below the national average for the first time since the housing recovery began. Washington’s decline has been similar, though it remains above the national average. Appreciation there has fallen from 12.4 percent annually in February to just 7.5 percent as of October.
Other report data:
–U.S. loan delinquency rate: 3.71% in October, up by 1.78% from September.
–U.S. foreclosure pre-sale inventory rate: 0.52%, down by 0.22 percent from September.
–States with highest percentage of non-current loans: Mississippi, Louisiana, Alabama, Arkansas, West Virginia.
–States with lowest percentage of non-current loans: Colorado, Oregon, Washington, California, Idaho
–States with highest percentage of seriously delinquent loans: Mississippi, Louisiana, Arkansas, Alabama, Tennessee.
