If you’re pulling a large share of your business in the refi market, TransUnion has good news: Four in five recent homebuyers may be looking to refinances in the next 12 months, according to a recent survey from the credit reporting agency.
Between Sept. 18 and Sept. 27, TransUnion polled 1,025 consumers who have taken out a mortgage in the last 24 months. The survey found that many feel that their current mortgage payments are stretching their household thin, and the potential for a lien with a lower interest rate is making them seriously consider refinancing those loans.
Overall, 80.1% of consumers agree or strongly agree that their current mortgage payment is a strain on their personal finances. Among millennials — the largest cohort of homebuyers — that share rises to 88.7%; Gen Z, at 79.7%, is right at the overall mark. Just 11.9% of recent buyers disagree or strongly disagree. Among millennials, that share drops to 6.7%.
Consequently, 80% of all consumers surveyed said they are very likely or likely to refinance in the next 12 months if rates fall, including 89.6% of recent millennial buyers. Large majorities of Gen Xers and Gen Zers — 78.5% and 77%, respectively — also said they anticipate a refi in the future if rates break the right way. (Notably, rates are currently moving in the opposite direction; a number of daily surveys reported average mortgage rates at 7% or above this week.)
“For many of these recent home buyers, their mortgage payment is their largest single payment each month,” said Satyan Merchant, senior vice president and mortgage and auto business leader for TransUnion. “The upside is that it is a payment that can be refinanced if the economic climate allows for it, and as interest rates begin to fall, this group of consumers should begin exploring this option. Conversely, lenders should be actively marketing to these refinance candidates, regardless of what their primary motivation to refinance may be.”
Notably, when asked about the most important factor that would ultimately push them to greenlight a refinance, rates weren’t the most common response. About 70% pointed to a more favorable loan term as a key driver, the largest share in the survey. Better interest rates (67%) were the second most common factor cited, followed by acquiring funds via a cash-out refinance.
