Over 7 Million Borrowers Eligible for Refinance

Over 7 million borrowers could benefit from a refinance today, according to data released from Black Knight Financial Services. In their monthly Mortgage Monitor Report, Black Knight reports the number of potential refinance candidates currently sits at 7.1 million, a substantial increase form just 4.1 million potential borrowers in February 2014. However, Black Knight’s SVP of Loan Data Products, Trey Barnes, says that number is fragile. According to Barnes, any increases in mortgage rates could cause that number to drop, even marginally.

“Of course, this population is rate-sensitive; in fact, it was largely the decline of 60 basis points in the prevailing 30-year interest rate that resulted in the year-over-year increase in potential refinance candidates,” he said. “Likewise, if interest rates were to rise by just half a percentage point, three million borrowers would fall right back out of the running as far as benefiting from refinancing their mortgages. Another interesting finding from this analysis: prepayment speeds (historically a good indicator of refinance activity) of lower credit score borrowers – those with scores below 620 – are the lowest we’ve seen since starting to track this data in 2000. As a result, the average loan age for this group is 98 months, as compared to just 38 months and less for borrowers with credit scores of 750 and above.”

The report also used the Black Knight Home Price Index to examine the makeup of 2014 residential real estate transactions. Traditional market sales outpaced 2013 levels and hit their highest level since 2007, although overall real estate sales were down for the year due to a decrease in distressed transactions.

Year-over-year home price appreciation rates are leveling off for both “bubble states” and the nation as a whole. The national year-over-year home appreciation rate currently sits at 4.6 percent, lower than the both the pre-crisis and post-crisis max. Nevada has the highest rate of state hit hardest by the financial crisis at 6.5 percent. Both “bubble state” California and Florida have rates higher than the national average, while Arizona sits below that average at 3 percent.

Florida has also seen the lowest level of home price appreciation (HPA) since the bottom of the market out of all the major “bubble states.” From the bottom of the housing market through the most current available HPI data, Florida has seen prices rise 30 percent, as compared to 35, 41 and 51 percent for Arizona, California and Nevada.