A total of 6.5 million borrowers could qualify for and benefit from traditional refinances and the Home Affordable Refinance Program (HARP), according to the Data and Analytics division of Black Knight Financial Services latest Mortgage Monitor Report, based on data as of the end of May 2015.
After reviewing current interest rates on existing 30-year mortgages and applying broad-based underwriting criteria, Black Knight found that 6.1 million borrowers could reap benefits from financing the traditional way. Additionally, given that HARP has extended it program through 2016, another 450,000 borrowers that meet HARP guidelines could benefit from refinancing through the program.
Black Knight Data & Analytics SVP Ben Graboske noted that these refinance opportunities could lead to massive savings for borrowers that qualify.
“For both groups, the potential monthly savings could be substantial. Some 500,000 American homeowners with a mortgage could save $500 or more each month by refinancing at today’s rates,” Graboske said. “Three million could save at least $200 per month. All told, in the aggregate we’re looking at about $1.5 billion dollars that American homeowners could be saving every month. It’s important to remember how rate-sensitive this population is, too; if rates go up just half a percentage point, 2.6 million people fall out of that refinanceable population.”
According to Black Knight, there are 1.6 million more refinanceable borrowers today than one year ago. This is partly due to home price appreciation, but mostly due to interest rate reductions. The refinanceable population is up from late 2013 and early 2014 levels, but still well below the peaks seen in 2012 when interest rates were at historic lows.
Black Knight also reviewed state refinance eligibility among borrowers finding that California leads the country with 14 percent of borrowers or 830,000 could likely qualify for and benefit from refinancing. Although Hawaii leads the country with about $550 in average monthly savings for refinance, the state only has 27,000 potential refinance candidates. Likewise, with an average savings of $364 per month, Washington, D.C. is second on that list, but has only 17,000 refinance candidates. California, New York, and Virginia are in the top 10 for both number of refinance candidates and average potential savings.