According to a recent report by Black Knight, the recent surge in mortgage rates of nearly 50 basis points eliminated approximately seven million “high quality” refinance candidates who are no longer available to lock into their “forever rates.” Black Knight looks at a “forever rate” as a rate that will no longer be available ever again. Their definition of a “high quality” candidate has an 80% loan-to-value ratio and a credit score of 720 or better. Even with seven million candidates dropping, they are reporting that there are still a whopping 11.1 million “high quality” refinance candidates available, amongst many other candidates that aren’t recognized as being in the top tier situation.
Black Knight went on to report that the average homeowner could still save almost $300 a month on a refinance. In addition, there are almost two million homeowners who could save almost $400 per month, and 1.2 million could save upwards of $745 per month. Fannie Mae’s economists echoed Black Knight’s report by stating that shares of originations tied to refinances will be 54% in 2021, down from 64% in 2020. Due to a continued forecast of rising rates, that share is expected to drop to 39% in 2022. Overall, right now appears to be the perfect time to act on a refinance while rates remain low, because they are not expected to revert back to the level we experienced during 2020.