Black Knight: 7.1 Million Borrowers Could Benefit From Refinancing

Posted by Patrick Barnard on April 08, 2015 No Comments
Categories : Mortgage Servicing

More than 7 million borrowers would benefit if they refinanced their mortgages today, a report from Black Knight Financial Services reveals.

According to the firm's Mortgage Monitor Report, recent mortgage interest rate decreases have brought the population of potential refinance candidates to about 7.1 million. That's up significantly from 4.1 million in February 2014.

However, this number has the potential to decline should rates climb, even marginally, according to Trey Barnes, senior vice president of loan data products for the company.

‘Of course, this population is rate-sensitive,’ Barnes explains in a release. ‘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.

‘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,’ he adds.

The report shows that lower-credit score borrowers in February were refinancing at the lowest levels on record.

In a related trend, Black Knight's Mortgage Monitor for February reveals that prepayment speeds – which are historically a good indicator of refinance activity – of borrowers with lower credit scores (under FICO 620) ‘are the lowest we've seen since starting to track this data in 2000,’ Barnes says. ‘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 shows that although there were fewer real estate transactions in 2014 compared to 2013, distressed sales made up a much smaller percentage of overall sales.

Specifically, just 12.7% of 2014 residential real estate transactions were distressed sales, the lowest such share since 2007 – down from 17% in 2013 and down from 33% in 2011. Florida led the country in 2014 with 25% of all transactions in the state coming from distressed sales.

With regard to the more basic data measured by the report, the total U.S. loan delinquency rate in February was 5.36% of all loans, a decrease of 3.70% compared to February.

The total U.S. foreclosure presale inventory rate was 1.58%, a decrease of 1.91% compared to the previous month.

States with the highest percentage of delinquent (30-plus days past due) loans in February were Mississippi, New Jersey, Louisiana, New York and Rhode Island.             Â

States with the lowest percentage of delinquent loans were Montana, Minnesota, South Dakota, Colorado and North Dakota.

States with the highest percentage of seriously delinquent (60-plus days past due) loans were Mississippi, Rhode Island, Louisiana, Maine and Alabama.

Register here to receive our Latest Headlines email newsletter

Leave a Comment