Qualified Refinance Borrowers Increased by 30% since January
January to February this year marked the drop in the interest rates by 30 basis points, creating an increase in the number for possible qualified borrowers for refinancing. According to the Mortgage Monitor Report, there is 30% or 1.5 million increase in borrowers who could both qualify for and benefit from refinance. This figure translates to 6.7 million borrowers who could save about $3,000 a year. In total, $20 billion in savings due to decreasing interest rates.
Black Knight Financial Services, which released this report stated that when they last looked at the refinanceable population merely two months ago, there were 5.2 million potential candidates, and that number was decreasing. Senior Vice President Ben Graboske said (printed by Housing Wire), “That analysis was shortly after the Federal Reserve raised its target rate by 25 basis points, at which time the prevailing wisdom was that mortgage interest rates would rise in response. Global economic shocks then sent investors looking for the safety of U.S. Treasuries, driving down yields on benchmark 10-year bonds. Mortgage interest rates began to fall in defiance of prevailing wisdom.”
Prepayment rates have hit a two-year low in January succeeding a significant slowing down in the fourth quarter.
The more potential candidates for refinancing give a welcome boost to the real estate market moving forward 2016.
The Mortgage Monitor report gave an example scenario to lay out the benefits and possibilities of this significant change in statistics where rates continue their downward trend. In the example, the 30-year rate went down to 3.5% and the population increased to 8.8 million. Since 2012 and 2013, this is the biggest number of refinanceable with rates at their lowest.
A week ago, mortgage rates increased from 3.62% to 3.64%. A first movement upward for the first time in two months.
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