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HousingWire Magazine: December 2021/ January 2022

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This webinar will be a discussion on understanding what’s to come in the future of mortgage lending by analyzing past trends in the industry, evolving consumer behaviors and demographics of the industry’s production capacity.

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In this episode of HousingWire Daily, Logan Mohtashami discusses how the new COVID variant, Omicron, will impact inflation and whether or not it will send mortgage rates lower.

Mortgage

Cheap rates create record high in “refi-eligible” population

11.7 million mortgage holders are eligible for refinancing, Black Knight says

More than half of all homeowners with a 30-year mortgage are now paying interest that’s 0.75% or higher than current rates, the largest share in six years, according to Black Knight.

Of those, 11.7 million are “refi eligible,” meaning they also meet broad-based underwriting criteria such as credit scores at 720 or above and enough equity to satisfy most lenders, Black Knight said.

“This is the largest number of `high-quality’ refi candidates since Black Knight began tracking the data point in 2000,” the company said in a statement.

That includes most of the mortgages originated in 2018, before trade wars and recession fears sent mortgage rates tumbling through most of 2019. 

“Keep an eye on the 2018 vintage: 80% of active mortgages originated last year have interest rates at least 0.75% higher than where they are today,” Black Knight said. “Some 5 million mortgages were originated in Q2 to Q4 of 2018 when rates averaged 4.5% or higher, representing 10% of the active mortgage universe and 17% of all refinance candidates.”

Cash-out refinancings, in which borrowers tap some of the equity in their homes and get money at the loan closing, are making a comeback. In 2019’s second quarter, 62% of all refinance lending was for cash-out mortgages, Black Knight said.

Tappable equity reached an all-time high of $6.3 trillion in the second quarter as home-price gains made real estate more valuable, the mortgage data company said in a report last month. The new record high is 26% above the 2006 peak near the end of the housing bubble.

The average owner with tappable equity has $140,000 available to borrow against, Black Knight said.

Mortgage rates have tumbled in recent months on signs the economy is slowing. The average U.S. rate for a 30-year fixed mortgage was 3.49% last week, according to Freddie Mac. That’s almost a full percentage point below a year earlier.

refi eligible population sept 2019

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