Even as interest rates begin to tick up from the historic lows we’ve seen in recent months, refinance incentive remains strong in today’s market. As of Thursday January 21, Freddie Mac was reporting the average 30-year conforming mortgage interest rate at 2.77%. This largely aligns with the more timely tracking of our own Optimal Blue Mortgage Market Index (OBMMI), though its daily measurement showed rates slightly higher by the time the Freddie Mac released the week’s average.

In any case, as rates passed the 2.75% threshold, the population of high-quality refinance candidates declined, but to a still historically large 16.7 million. This is above and beyond the more than 9 million people who refinanced in 2020.

As a reminder, Black Knight Knight defines refinance candidates as those 30-year mortgage holder who are current on their mortgage payments, have at least 20% equity in their homes and credit scores of 720 or higher, and who stand to cut their first lien interest rate by at least 0.75% via a refinance.

Should rates fall to 2.75% or below once again, the population would climb back to 18.1 million. If rates continue their upward trend and cross the 2.88% threshold, 1.5 million people would lose refinance incentive.

Refinance Candidate Rate Scenarios

In total, the 16.7 million refinance candidates could save an aggregate of $5.1 billion per month if everyone took advantage of today’s rates. That works out to an average of $305/month per homeowner. Some 3.8 million are in the position to save $400 or more per month. All together, this could certainly act as an economic stimulus of sorts; particularly welcome as the U.S. tries to find its way out of the COVID-19 pandemic and its many negative economic impacts.

The 10 largest states by population account for 9.2 million of the total population, with California seeing far and away the greatest single-state aggregate monthly savings. At just over $1 billion, that’s roughly equivalent to the savings of the next three largest states combined.

State Refinance Candidates Avg Savings Per Borrower Total Monthly P&I Savings
CA 2,492,000 $415 $1,034,038,000
FL 1,226,000 $265 $324,773,000
TX 1,154,000 $260 $300,040,000
NY 976,000 $415 $405,008,000
IL 677,000 $275 $186,192,000
PA 555,000 $264 $146,424,000
NC 552,000 $254 $140,238,000
VA 548,000 $345 $189,015,000
OH 547,000 $216 $118,095,000
NJ 529,000 $367 $194,283,000

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