A look at Biden’s first week in office

This episode reviews last week’s inauguration of President Joe Biden, examining which housing issues the new administration has already taken action on.

Biden’s executive order will extend foreclosure moratorium

President Biden revealed his plan to sign 17 executive orders his first day in office, including am extension of the eviction and foreclosure moratorium to at least March 31.

If consumers aren’t holding lenders back, then who or what is?

The challenge for lenders and investors is understanding how to meet borrowers where they are without layering on risk or getting bogged down in third-party intermediation.

HomeBridge’s Brian White on diversity at a practical level

HomeBridge's Brian “Woody” White discusses ways to increase diversity within the housing finance industry.

Mortgage

Falling rates boost refi eligible mortgages

“It would not be surprising to see another surge in refinancing activity,” Black Knight says

Low borrowing costs have made 11.1 million U.S. mortgages “refi eligible,” meaning borrowers would save money by getting a new home loan even with the application and funding costs, according to Black Knight.

The average U.S. rate for a 30-year fixed mortgage was 3.45% last week, matching the three-year low set during February’s first week, according to Freddie Mac. A year earlier, the rate was 4.35%.

The “refi eligible” number measures borrowers paying interest that’s 0.75% or higher than current rates who also have credit scores above 720 and enough equity to get a new loan, the mortgage data and software firm said.

“Given the increasing refinance incentive, it would not be surprising to see another surge in refinancing activity,” Black Knight said in a statement.

The average savings per borrower would be $268 a month, Black Knight said. That means the aggregate savings, if all eligible borrowers got new mortgages, would be $3 billion a month.

Some of that would be plowed into consumer spending, which accounts for about 70% of U.S. GDP, providing a boost to the economy.

Americans are awash in home equity, Black Knight said. Its measure of tappable equity, the combined value of the nation’s homes exceeding the mortgages against them, stood at $6.2 trillion in the fourth quarter, not far from the record $6.3 trillion set in 2019’s second quarter.

“More than 75% of the folks with tappable equity have current first lien rates at or above 3.5%,” Black Knight said. “That means in many cases folks could tap their equity while keeping their first-lien rate as good as or even better than what they have now.”

Homeowners typically tap into the value of their homes using home equity loans or by refinancing their primary home loan in what’s known as a “cash-out” mortgage.

In the fourth quarter, about 76% of homeowners who tapped equity via cash-out refis were able to keep their interest rate the same or get lower rates, the largest such share in three years, Black Knight said.

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