As mortgage rates stay below 3% for the 17th consecutive week, a Black Knight report released Friday found that the number of “high quality” refinance candidates continues to climb. According to the report, a whopping 19.4 million homeowners are now in a position to save through refis – the most in history.
Black Knight’s report views prime candidates as 30-year mortgage-holders who have at least 20% equity in their homes, credit scores of 720 or higher, are current on their payments and who stand to cut their first lien rates at least 0.75% by refinancing.
Looking at current mortgage rates, Black Knight estimates those 19.4 million candidates can save an average of $309 per month by refinancing. If every qualified borrower did so, the aggregate potential savings would be the most ever recorded – a massive $5.98 billion.
Some borrowers could save even more. With today’s rates, the report found 4.5 million could save at least $400 a month, while 2.7 million could save an average of $500 or more.
Regionally, California led the nation in number of refi candidates – a total of 3 million could potentially save on average $420 a month. Florida recorded 1.4 million borrowers who could do the same, followed by 1.3 million in Texas and 1.1 million in New York.
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Black Knight notes that its loan-to-value (LTV) and credit score assumptions are “conservative by design,” meaning there are non-cash-out refi products available for borrowers with even higher LTVs and lower credit scores.
If Black Knight were to remove these conservative eligibility requirements, the number of potential candidates would jump nearly 65% to 32.1 million mortgage-holders Black Knight lists as “in the money”.
Last Thursday’s mortgage rates fell to 2.72%, the lowest ever recorded in Freddie Mac’s 50-year survey history. Though there is much speculation on what rates will do next year, the Mortgage Bankers Association has estimated rates will rise to 3.3% by Q4 2021 as the economy begins to rebound.
Borrowers taking advantage of the record low rates to refinance during the last month of 2020 will be paying the 50 bps adverse market refinance fee, which starts on Dec. 1.