It still makes sense for millions of people to refinance

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Published Date 9/21/2020

Despite a record $1.1 trillion in originations for those refinancing their homes in the second quarter and testing the limits of lenders’ capacity, it’s no secret that conditions exist to blow even that number out of the water, according to HousingWire’s Jason Kleimann.

Kleimann quotes data and analytics firm Black Knight, which reports that there are over 19 million high-quality refinance candidates in America, representing 43% of all 30-year mortgage holders, many more than the 11.7 million eligible homeowners this time last year. The firm defines “high-quality” refinance candidates as those with credit scores of 720 or higher, who hold at least 20% equity in their homes, are current on their mortgage payments, and could shave at least 0.75% off their first rate lien by refinancing.

They also found that should all of those candidates decide to refinance, the average savings would amount to $299 a month, an aggregate of $5.3 billion, the data firm’s researchers found. More than 7 million could save at least $300 a month, while 2.5 million could save $500 a month or more, Black Knight said.

Kleimann also quotes other experts who agree that the low-rate environment is likely to persist well into 2021, which means there is a huge focus in the lending community on building capacity to meet the explosion of consumer demand. Because some lenders don’t have the infrastructure to handle the existing pipeline, they could struggle to handle the volume.

Source: HousingWire | TBWS

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