Refinance population has jumped by 2 million

Black Knight reports largest number of refi candidates in almost 3 years

Refinance population has jumped by 2 million

There has been a significant increase in the number of US homeowners who would qualify for a refinance mortgage and make a saving of at least 75 basis points.

The lower average mortgage rate of 3.99% reported by Freddie Mac means that 2 million more homeowners joined the refinance population, following a 1 million month-over-month decline a month ago.

Black Knight’s Mortgage Monitor reveals that there are 5.9 million refinance candidates, the highest in almost 3 years.

That would mean an average saving of $271 per month, although nearly 1 million took out their mortgage in 2018. The aggregate monthly saving by refinancing at current rates would be $1.6 billion.  

Improved affordability

Meanwhile, the firm’s figures show that housing affordability has strengthened, based on data from March 2019.

“In what is usually the calendar-year high point for home price gains, month-over-month appreciation in March 2019 was just 1%, down from 1.25% at the same time last year,” said Black Knight’s Data & Analytics Division President Ben Graboske. “Likewise, the annual rate of appreciation has now slipped to 3.8%, the first time annual home price growth has fallen below its 25-year average of 3.9% since 2012. That makes 13 consecutive months of home price deceleration.

He added that lower mortgage rates have already has a positive impact on affordability.

“The monthly payment needed to purchase the average-priced home with a 20% down payment has declined by 6% in the last six months. It currently requires $1,173 per month to make that purchase, the lowest such payment in more than a year,” added Graboske. “When we factor income into the equation, we see that it takes 22% of the median income to purchase the average-priced home. That’s the lowest payment-to-income ratio in more than a year as well, and far below the long-term average of 25.1%. That the market reacted in terms of slowing home price growth even before we hit that long-term average suggests that a 25% payment-to-income ratio may not be sustainable in today’s market, whether due to excess non-mortgage related debt, lending standards or other factors.”