With the 30-year fixed mortgage rate dropping to 2.86%, the number of high-quality refinance candidates has reached a new record high, according to Black Knight.
The all-time low mortgage rate has resulted in a refinanceable population of 19.3 million high quality candidates, defined by Black Knight as holders of 30-year mortgages who have credit scores of 720 or higher, who hold at least 20% equity in their homes and who would trim at least 0.75% from their first lien mortgage rate with a refi.
Essentially, it’s the number of people who would both likely qualify for and benefit from a refinance. (Ignoring eligibility requirements, a whopping 32.4 million mortgage holders — three out of every four American homeowners with a 30-year mortgage — currently have first lien rates 0.75% or more above the current mortgage rate.)
The benefit could be a substantial one for those refinanceable borrowers, too. The average savings for high quality refi candidates is $299 a month — a total of $5.8 billion per month if all 19.3 million take advantage. That figure marks the largest ever aggregate savings available through a refinance since Black Knight began keeping track.
Small fluctuations in the average mortgage rate continue to have a big impact on the population of borrowers with refinance incentive, especially as the mortgage rate keeps trending downward. Consider that the refinanceable population has swelled by over a million since the week ending August 27, when the mortgage rate (as reported by Freddie Mac) was 2.91% and there were nearly 18 million high quality refi candidates.
What does it all mean? In a nutshell, there’s a strong possibility that the refinance boom could continue well into the third quarter and beyond.
“While Q2 refinance activity was record-breaking, refi lock data suggests Q3 refinance volumes could climb even higher,” Black Knight Data & Analytics President Ben Graboske said last week. “Locks on refinance loans expected to close in the third quarter, assuming a 45-day lock-to-close timeline, are already up 20% from Q2.
“With market conditions as they are and given the recent delay of the 50 basis points fee on GSE refinances until December, we would expect near-record low interest rates to continue to buoy the market.”