Black Knight: 5.2 Million Could Benefit from Refinancing
With mortgage rates all but certain to creep up this year following the Federal Reserve’s decision to boost key interest rates, Black Knight Financial Services, Jacksonville, Fla., said the refinance window that’s been open for years could start to close.
The company’s monthly Mortgage Monitor report said 5.2 million borrowers remain who could both qualify for, and benefit from, mortgage refinancing. This is down from more than seven million borrowers as recently as April 2015, when interest rates fell below 3.7 percent.
Black Knight Data & Analytics Senior Vice President Ben Graboske said as this population diminishes and as mortgage interest rates rise, the number of eligible borrowers will only continue to shrink further.
“If rates go up 50 basis points from where they are now, 2.1 million borrowers will fall out of the running; a 100-basis-point increase would eliminate another million, leaving only 2 million potential refinance candidates, the lowest population of refinance candidates in recent history,” Graboske said. “That said, of those that could likely qualify for and benefit from refinancing today, some 2.4 million are looking at potentially saving $200 or more on their monthly mortgage payments post-refinancing.”
At the same time, Graboske noted, tappable equity is on the rise, up to $4.2 trillion, an increase of $600 billion from a year ago. Black Knight estimated that more than 37 million borrowers with current combined loan-to-value of 80 percent have an average of $112,000 equity available, up from 34 million a year ago.
“Roughly half of that tappable equity belongs to borrowers whose first-lien mortgages have current interest rates higher than today’s 30-year rate, making them potential candidates for cash-out refis, but the other half are under 4 percent, Graboske said. “As rates rise, HELOCs will continue to become more popular to homeowners looking to tap available equity.”
The report said the total U.S. loan delinquency rate rose to 4.92 in December, a month over month increase of 3.18 percent. The total U.S. foreclosure pre-sale inventory rate fell to 1.38 percent, down by 3.24 percent from a month ago.
Black Knight said states with highest percentage of non-current loans were Mississippi, New Jersey, Louisiana, New York and Maine; states with the lowest percentage of non-current loans were South Dakota, Minnesota, Colorado, Alaska and North Dakota. States with highest percentage of seriously delinquent loans were Mississippi, Louisiana, Alabama, Rhode Island and Maine.
