With current rates, 8.2 million borrowers could refinance and lower their interest rates by at least 75 basis points.

Rates on home loans have been on a roller coaster for the last year, but now they’re sitting at the bottom of the track, giving a major boost to the number of borrowers who can benefit from a refinance. The average rate on the 30-year fixed hit a three-year low in late June, according to Freddie Mac. That means 8.2 million borrowers could refinance and lower their interest rates by at least 75 basis points, estimates Black Knight, a mortgage software and analytics company. It’s the largest group since the end of 2016. It is also a jump of 6.3 million eligible borrowers since last November, when rates peaked at just over 5%. 

The average borrower could save about $266 per month, bringing the total amount of potential savings to about $2.2 trillion. While most borrowers tend to refinance after several years, about 1.5 million borrowers, or 35% of those who took out their loans just last year, could benefit greatly. No surprise that refinances, have jumped in the past few months as rates began their swoon. Applications to refinance a home loan were up a striking 92% annually at the same time, according to the Mortgage Bankers Association. Ben Graboske, president of Black Knight Data & Analytics indicated, “ARM [adjustable-rate loans] prepayment rates have now jumped to their highest level since 2007 as borrowers have sought to shed the uncertainty of their adjustable-rate products for the security of a low, fixed interest rate over the long haul.” 

Source: CNBC