While refinance volume has dropped off in recent years as interest rates have inched upward, incentive to refinance has returned for some homeowners.
According to the latest data from Black Knight, about 550,000 more borrowers could lower their mortgage payments by refinancing.
As of Dec. 27, 2018, interest rates fell below 30 basis points to 4.55%, the report states, meaning that about 2.4 million borrowers can now likely qualify to reduce their interest rates by 0.75% by refinancing their existing mortgages.
The data represents a 29% boost from a recent 10-year low for refis. Still, the number of refi candidates is down 50% from last year.
Ben Graboske, executive vice president of Black Knight’s Data Analytics division, said the latest bump “may provide some solace to a refinance market still reeling from multiple quarters of historically low – and declining – volumes.”
Graboske said that refinances made up just 36% of the mortgage market in the third quarter of 2018 – an 18-year low.
He noted that the shift toward a purchase-dominate market prompts one to ask how this might impact mortgage performance.
“Refinances have tended to perform significantly better than purchase mortgages in recent years,” Graboske said. “As today’s market shifts to a purchase-heavy blend of lending, Black Knight will continue to keep a close eye on the data for signs of how – or if – this impacts mortgage performance moving forward.”