Rate Drops Open Door to Refinancing for Nearly 550,000

February 5, 2019
Woman looking over mortgage documents while she discusses refinancing on the phone.
Increase represents 29% rise from October


Black Knight, Jacksonville, Fla., said with recent drops in interest rates, the number of homeowners with financing who could likely qualify for and see at least a 0.75 percent interest rate reduction by refinancing increased by nearly 550,000. The company's monthly Mortgage Monitor Report said as recently as October, rising interest rates put the refinanceable population at a 10-year low. Since then, said Black Knight Executive Vice President Ben Graboske, rates have fallen, but even so, at 2.43 million, the refinanceable population is 50 percent lower from a year ago. "Still, the increase does represent a 29 percent rise from that 10-year low, which may provide some solace to a refinance market still reeling from multiple quarters of historically low--and declining-volumes," Graboske said. Black Knight said through the third quarter, refinances accounted for just 36 percent of residential originations, making 2018 the most purchase-dominant market in 18 years. "And of course, as refinances decline, the purchase share of the market rises correspondingly," Graboske said. "Refinances have tended to perform significantly better than purchase loans in recent years. When we take a look back and apply today's blend of originations to prior vintages, the impact becomes clear. A market blend matching today's would have resulted in an increase in the number of non-current loans by anywhere from two percent in 2017 to more than a 30 percent rise in 2012, when refinances made up more than 70 percent of all lending."

Source: The Mortgage Leader