A lucrative business segment

by Justin da Rosa14 Jul 2015
Mortgage originators can expect to cash in on a number of refinance opportunities, according to Black Knight Financial Services.

"By looking at current interest rates on existing 30-year mortgages and applying broad-based underwriting criteria, we found that approximately 6.1 million borrowers make good candidates for traditional refinancing," Black Knight senior vice president Ben Graboske said in an official release. "An additional 450,000 meet HARP-eligibility guidelines. For both groups, the potential monthly savings could be substantial."

It’s good news for originators, following statistics that pointed to a recent decline in refinances. Especially for loan officers looking for an excuse to contact past clients – many of whom would benefit from refinancing at this point in time.

The survey also found that 4.96 percent of American loans are delinquent, an increase of 3.95 percent, month-over-month.

"Today, the principle and interest payment on a median-priced home is equivalent to 21 percent of median gross monthly income nationally," Graboske said. "In the years before the housing bubble that ratio was closer to 25-26 percent, and at the height of the market in 2006, it peaked as high as 33 percent.”

According to Blackrock, a mere one percent increase in interest rates could have as big an effect on housing affordability as a 13 percent home price gain – meaning clients may want to refinance now before rates tick up.

“The monthly payment on a median-priced home is $400 less today than it was in 2006. But, if we look at an example scenario where interest rates rise by 75 basis points a year and home prices appreciate by three percent annually, the payment-to-income ratio would be at 27 percent by 2017,” he continued. “In this scenario, the payment on the median-priced home would increase by $116 per month over the next year and $241 per month by March 2017.”


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