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Home appraisal’s ugly history and uncertain future

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Mortgage

Three-year low in rates makes 11.3 million mortgages refi-eligible

The average savings per borrower would be $268 a month, Black Knight says

A three-year low in the average U.S. rate for a 30-year fixed mortgage pushed the number of “refi eligible” borrowers to 11.3 million, the second-highest on record, according to Black Knight.

That figure represents the number of 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.

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 $3.03 billion a month.

Since Americans love new gadgets, much of that would be put into the economy to boost the consumer spending that accounts for about 70% of GDP.

If you don’t consider credit scores and equity, there are 22 million mortgage holders who have loans more than 0.75% higher than current rates, what the mortgage industry calls being “in the money,” Black Knight said. That, too, is the second-highest on record.

The record for both categories was set in September, the last time rates fell to a three-year low. But, many of the borrowers who were refi-eligible then have already gotten new loans with cheaper financing.

The average U.S. rate for a 30-year fixed mortgage this week fell to a three-year low of 3.45% as worries about coronavirus drove investors into the U.S. bond markets.

When investors get rattled, they tend to cash out of stocks and put their money in bonds, which are perceived as being safer. That creates more competition for bonds, including mortgage bonds, and forces investors to accept smaller yields. When they do, borrowers reap the benefit because it translates into cheaper rates for home loans.

The three year low reported by Freddie Mac on Thursday was the cheapest rate since 3.42% in the first week of October 2016 and it’s almost a full percentage point below the 4.41% recorded a year earlier.

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