Refinance demand has essentially dried up in the last year, but could things finally be turning around?
Maybe, according to the latest data from Black Knight, which revealed that there are now 3.27 million homeowners who could reduce their mortgage rate by at least 0.75% by refinancing their mortgage.
This is a 16% year-over-year increase and the greatest number of potential candidates since January 2018.
The number of homeowners who could benefit from a refinance has now jumped 75% since November 2018, which saw the potential refi market fall to a 10-year low.
“More than 250,000 homeowners who took out their mortgages just last year on the higher end of the rate spectrum could now likely reduce their rate significantly by refinancing,” the report said.
But Black Knight also warned that even though lower mortgage rates have raised incentive, it might not translate into high volume.
“Impacts may be muted, as the vast majority of incentive (>85%) continues to be held by homeowners who took out their mortgages more than seven years ago,” it noted.
But things could be looking up for the cash-out refinance market.
“Recent rate declines may also result in increased cash-out lending, volumes of which softened as equity utilization became more expensive in late 2018,” Black Knight stated.