A new report by CNBC states that the average borrower could save about $266 per month because of the low mortgage rates, which could bring potential savings to about $2.2 trillion.
The report adds that with the 30-year fixed rate mortgage hitting a three-year low of 3.73%, 8.2 million borrowers could refinance and lower their interest rate by at least 75 points, according to the Black Knight.
Those eligible for refinancing increased by 6.3 million since last November when rates were more than 5%. CNBC stated that about 1.5 million borrowers, or roughly 35% of those who took out loans last year, could benefit from lower mortgage rates and refinancing. Mortgage applications to refinance rose 92% last week, and refinances for loans originated last year increased 300%.
“While we’ve observed increases across nearly every investor type, product type, credit score bucket and vintage, some changes stand out,” said Ben Graboske, President of Black Knight Data & Analytics. “For instance, prepayments among fixed-rate loans have hewed close to the overall market average, rising by more than two times over the past four months. However, ARM [adjustable-rate mortgage] prepayment rates have now jumped to their highest level since 2007 as borrowers have sought to shed the uncertainty of their adjustable-rate products for the security of a low, fixed interest rate over the long haul.”
CoreLogic reported last month that declining mortgage rates have also caused the typical mortgage payment to drop below that of home prices in March 2019, reversing an almost year-long trend.
According to the report, the U.S. median sales price in March 2019 of $222,482 was up 3.5% year-over-year, which is down from an annual 8% gain last March. Mortgage payments grew by just 1.9% in March 2019—a steep drop from the reported 11% increase in March 2018.
“Moreover, some rate and price forecasts suggest the mortgage payments homebuyers face the rest of this year will, on a year-over-year basis, be only slightly higher or a tad lower, which could help spur home sales,” the report states.