The average rate on the 30-year fixed home loan fell to a record low of 3.29%, Freddie Mac reported in early March. That’s down from the previous low of 3.31% in November 2012, in the wake of the financial crisis. Fears of the coronavirus hitting financial markets have pushed bond yields down, yields which rates on home loans generally track. That drop means that now nearly 13 million borrowers can save money by refinancing their home loans and lowering their current rates by at least 75 basis points, according to Black Knight, a mortgage data and analytics company.
That is the highest number of potential refinance candidates on record. It is also an increase of 1.7 million eligible borrowers in just the last week and a 60% jump year to date. The average borrower can save about $277 per month on a 30-year fixed loan. If all those borrowers did it, that would be a collective $3.5 billion a month in payments. While most borrowers are doing straight refinances to lower rates, some are doing cash-out refinances. Homeowners today have a record amount of tappable equity in their homes, that is, equity above the 20% threshold of equity lenders will require to remain in the home. About 45 million borrowers have tappable equity, representing $6.2 trillion collectively at the end of last year.