About 7 million refi candidates missed the “forever rate” boat


A more than 40 basis point hike in mortgage rates over the past month has resulted in around 7 million high-quality refi applicants no longer able to lock in “rates forever,” according to a recent report from Black Knight.

On February 11, the mortgage data and analytics provider estimated that 18.1 million borrowers met general underwriting criteria and could save at least 0.75% on their mortgage rate through a refi. It was back when rates were as low as 2.73% that some invented “forever rates” because they are unlikely to be that low again for decades.

But upon learning that mortgage rates climbed to 3.17% last week, Black Knight reported that there are only 11.1 million “high quality” refi applicants left. This is the smallest number of potential refi candidates in a year.

For Black Knight, these applicants are defined as a 30-year mortgage lender with a maximum loan-to-value ratio of 80% and credit scores of 720 or higher.

Lenders need the stars to match some of the fewer applicants. But if they do, the average homeowner could potentially save almost $ 300 per month through refinancing. About 2 million of those applicants could save more than $ 400 per month, while another 1.2 million could save more than $ 745 per month, Black Knight said.

Should lenders turn to non-QM when the refi boom slows?

HousingWire recently spoke with Tom Hutchens, senior vice president of production at Angel Oak, who spoke about how non-quality management loans could be an effective way for lenders to replace lost business. if the refi boom slows down.

Presented by: Angel Oak

In California alone, there are 1.43 million refi applicants who could save $ 534 million in payments and interest. In the New York metropolitan area alone, there are 713,000 applicants for refinancing. With an average savings of $ 412 per borrower, they would cumulatively save nearly $ 294 million.

Excluding Black Knight’s eligibility criteria, there are nearly 19 million 30-year mortgagees who are “in the money”, with current interest rates of at least. 0.75% above the current rate.

If every candidate for “high quality” refinancing repackaged their loan, Black Knight estimates that a $ 36 billion stimulus would flow to the economy from potential savings. Of course, few, if any, economists believe that 11 million borrowers are planning to seize this opportunity.

Fannie Mae’s The economic research group has forecast that in 2021, the refinancing share of the origination activity should drop to 54%, from 64% in 2020. By 2022, the refinancing share should reach 39% due to the continued rise in mortgage rates, further depleting the pool of refi applicants.

Even years that don’t swell like 2020 attract millions of potential refi borrowers, but demand seen last year requires historically low rates. And the industry doesn’t expect them to come down anytime soon.

A positive liner from the January Black Knight Mortgage Monitor report revealed that rate foreclosure volumes remained relatively high until mid-February. Although refi locks have retreated slightly since early January, they were more than double the volume seen in the same two-week period last year. Black Knight suggested that the 30-year rate hikes may have prompted once-dithering borrowers to act while rates were still near their all-time lows.

Assuming a 45-day lock-to-close deadline, Black Knight’s rate lockout data from mid-February suggests refi activity may remain relatively stable this quarter before recent rate spikes start to sink. have a severe impact on closed loan volumes.

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