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The Newtonian notion that every action creates a reaction has permeated the housing world, a new data from Black Knight Financial Services (BKFS) has determined that the 30-basis-point decline in interest rates during the first six months of this year has increased the population of refinanceable borrowers by 30 percent to 6.7 million.
“When Black Knight last looked at the refinanceable population just two months ago, there were 5.2 million potential candidates, and that number was on the decline,” said Ben Graboske, senior vice president at Black Knight Data & Analytics. “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.”
Graboske stated that 3.3 million of refinance-ready borrowers could save $200 or more each month, and nearly one million could save over $400 per month; the average borrower could save around $3,000 per year. And if rates go higher, the situation changes even more.
“We also looked at an example scenario to see the potential impact if rates continued their downward trend and found that an additional 15-basis-point reduction–taking the 30-year fixed mortgage rate down to 3.5 percent–would bring yet another 2.1 million borrowers into the refinanceable population,” he added. “At 8.8 million, that would make for the largest refinanceable population since 2012-2013, when rates were at historic lows.”