On Thursday, November 19, Freddie Mac’s Private Mortgage Market Survey reported the average 30-year mortgage interest rate offering as 2.72%, an all-time record low. If that sounds familiar, it’s because it is: that marked the 13th record low for rates this year.
At Black Knight, we keep a careful eye on how rates impact the market, and in particular, how rising or falling 30-year rates affect the number of homeowners who could both benefit from and likely qualify for a mortgage refinance.
We tend to look at what could be termed “high quality” refinance candidates – those 30-year mortgage-holders who have at least 20% equity in their homes, credit scores of 720 or higher, are current on their payments and who stand to cut their first lien rates by at least 0.75% by refinancing.
With Thursday’s rates, we’ve seen that population swell to its largest ever. Some 19.4 million homeowners are now in a position to save an average of $309 per month by refinancing, for an aggregate $5.98 billion in potential monthly savings – also the most in history.
Drilling a bit deeper into data from McDash, we see that there are over 4.5 million candidates who could save at least $400 per month, 2.7 million of whom could save $500 or more each month by refinancing at today’s rates.
California leads the nation, with over 3 million candidates who could save an average of $420 per month for an aggregate $1.3 billion in monthly savings. It is followed by Florida (1.4 million), Texas (1.3 million) and New York (1.1 million).
The greater New York City metro area leads all Census Bureau Statistical Areas with nearly 1.4 million high quality refinance candidates, who stand to save an aggregate $606 million per month by refinancing for an average monthly savings of $437 per homeowner. The Los Angeles, Chicago and Washington D.C. metro areas follow, with 960,000, 723,000 and 575,000 candidates respectfully.
Removing our broad-based eligibility criteria, there 32.1 million 30-year mortgage holders nationwide who are “in the money” for a refinance, meaning they have current first lien rates at least 0.75% above the going rate. Some – if not many – of these borrowers may qualify for a refinance but are less likely to secure the best rate offerings in today’s market.
With the interest rate landscape remaining in flux as the U.S. economy continues to grapple with the fallout of the COVID-19 pandemic and other factors, Black Knight will revisit and report upon this data as circumstances dictate. Be sure to subscribe to and/or visit this blog often for further updates.