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9.4M Refi Candidates Across the Nation

Black Knight reported that today’s homebuyers can be greatly affected by even a small change in interest rates, and a shift in either direction could make the difference between a gloomy forecast of clouds or a sunny outlook for candidates with hopes to qualify for refinancing a mortgage. 

Black Knight estimates there are 9.4 million homeowners eligible for refinances in America, this would mean that the average savings per borrower would amount to roughly $264 per month. As for the Aggregate Monthly P&I Savings, that would fall at around $2 billion, meaning that among these 9.4 million high-quality refinance candidates, an estimated 2.6 million could save $300 or more on their monthly P&I payment.

According to the report, Freddie Mac’s 30-year average dropped to its lowest level in three months when it posted at 3.6%. This percentage is roughly 0.25% above the record lows. Due to this dip, the nation’s number of candidates that have a good shot at qualifying for refinancing was boosted to an estimated 9.5 million. 

The specific criteria for what Black Knight considers to be “qualified” candidates include those 30-year mortgage holders that possess, at most, an 80% loan-to-value ratio, coupled with reputable credit scores (specifically 720 or above). This criteria is decided upon as this would allow for such borrowers to have the ability to cut their current first lien rate by 0.75% via refinancing once officially qualified.  

Black Knight further detailed the top 10 states with the greatest number of refi candidates within. Respectively, from greatest to least, these states include California, Florida, Texas, New York, Illinois, Ohio, Arizona, Georgia, Pennsylvania, and North Carolina.

The sector leading the way in refinances is millennials. Ellie Mae reported previously that 31% of loans closed by millennials in November 2019 were refinanced—down 3% from the prior month. 

This is the first month-over-month decline in the share of refinances since May 2019.

For all loans closed by millennials, the average interest rate was 3.95%, which is up from October’s 3.90%. Rising interest rates brought a month-over-month decline in refinances in several large metros: Los Angeles, California (56% to 50%); Chicago, Illinois (43% to 38%); Austin, Texas (32% to 26%); Miami, Florida (28% to 22%); San Francisco, California (51% to 48%); and Dallas (30% to 26%).

“Millennials are well-educated on their options as homeowners and have played a major role in driving the refinance market in 2019,” said Joe Tyrrell, COO at Ellie Mae. “Interest rates increasing in November for the first time this year may indicate that the refinance boom has passed its peak, however, rates are still relatively low and refinance share is up 21 percentage points year-over-year.”

About Author: Andy Beth Miller

Andy Beth Miller is an experienced freelance editor and writer. Her main focus is travel writing, and when she is not typing away from her computer at her home in the Hawaiian Islands, she is regularly roaming the world as a digital nomad, and loving every minute of it. She has been published in myriad online and print magazines, is a fan of all things outdoors, and finds life (and all of its business, technological, and cultural facets) fascinating in their constant evolution. She is excited to spectate as the world changes, and have a job that allows her to bring a detailed account of those constant shifts to her readers at home and abroad.
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