The dip in mortgage interest rates during December increased the number of homeowners who could likely qualify for refinances and see at least a 0.75 percent interest rate reduction by approximately 550,000, according to Black Knight, Inc.’s latest Mortgage Monitor Report.
Ben Graboske, executive vice president of Black Knight’s Data and Analytics division, said although the 550,000 represents a relatively small share of outstanding mortgages, it is a sizeable increase from recent lows in the size of the refinanceable population.
“As recently as last month, the size of the refinanceable population fell to a 10-year low as interest rates hit multi-year highs,” Graboske said in a release. “Rates have since pulled back, with the 30-year fixed rate falling to 4.55 percent as of the end of December.
“As a result, some 550,000 homeowners with mortgages who would not benefit from refinancing have now seen their interest rate incentive to refinance return,” Graboske added. “Even so, at 2.43 million, the refinanceable population is still down nearly 50 percent from last year. Still, the increase does represent a 29 percent rise from that 10-year low, which may provide some solace to a refinance market still reeling from multiple quarters of historically low – and declining – volumes.”
According to Black Knight, through the third quarter of 2018, refinances made up just 36 percent of mortgage originations, an 18-year low.
“And of course, as refinances decline, the purchase share of the market rises correspondingly,” Graboske said. “So now, in the most purchase-dominant market we’ve seen this century, we need to ask whether the shift in originations will have any impact on mortgage performance. The short answer, based on historical trends, is that it certainly bears close watching.”