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The average interest rate on the popular 30-year fixed mortgage has set a record 13 times lower so far this year. It was redone last week. This has given current homeowners unprecedented ability to save on their monthly payments through refinancing.
The number of “high-quality” mortgage refinance candidates rose to 19.4 million, with Freddie Mac’s latest record low of a weekly 30-year fixed average, according to Black Knight, a mortgage technology and data provider. This is the highest volume on record.
Black Knight defines refinance candidates as 30-year mortgage holders with at least 20% equity in their homes and credit scores of 720 or more, who shave at least 0.75% off their current first lien rate by refinancing can do.
These borrowers can save an average of $ 309 per month, which is also the highest in history, for a total of $ 5.98 billion in potential monthly savings. While this is an average, some borrowers may save even more, given current interest rates.
More than 4.5 million borrowers can save at least $ 400 per month, and 2.7 million more per month, by refinancing at today’s rates.
“With 30-year rates on historical lows, refinancing volumes are expected to remain strong in the coming weeks, especially the record high numbers of eligible candidates,” said Andy Knight, economist at Black Knight and director of market research. “The third quarter saw an all-time high for refinancing origins, and consolidated rate lock data from the Black Knight’s Compass Analytics and Optimal Blue divisions suggest volumes could remain at or above record levels in Q4. “
Going through a mortgage refinance is not really a pleasant experience, according to the Mortgage Bankers Association, which has been involved in hard paperwork, with 4.6 million borrowers already through the third quarter of this year.
The number of potential refinance candidates varies according to the state-given population and home values. In high-cost states, borrowers have larger loans and are likely to be able to save more through a refinance per month.
California leads the nation in volume, with more than 3 million candidates who can save an average of $ 420 per month for a total of $ 1.3 billion in monthly savings. It is followed by Florida (1.4 million), Texas (1.3 million) and New York (1.1 million).
According to the city, New York City comes with the most savings in the metro area. Approximately 1.4 million high-quality refinance candidates could potentially save a collective $ 606 million per month by refinancing for an average monthly savings of $ 437 per month. The Los Angeles, Chicago and Washington, DC, metro areas run with 960,000, 723,000 and 575,000 candidates, respectively.
While most borrowers are still refinancing directly, the possibility of large cash-out refinances is increasing due to record high domestic equity. Home values are rising due to the huge demand for housing that has been plagued by the epidemic. According to the S&P Case Schiller National Home Price Index, prices rose 7% year-over-year in September. The amount of potential equity borrowers can tap, while still leaving 20% in the home, is now near a record high.