Q1 2020 cash-out refinances fell despite record exploitable equity; Low rates have increased incentives to refinance even in the face of rising defaults
JACKSONVILLE, Florida, July 6, 2020 / PRNewswire / – Today, Data analysis division of Dark Knight, Inc. (NYSE: BKI) released its latest Mortgage monitoring report, based on the company’s mortgage performance, housing and public records data sets. As President of Black Knight Data & Analytics Ben Graboske explained, despite record interest rates and record levels of workable equity – the amount available for homeowners with mortgages to borrow before reaching a maximum combined loan-to-value ratio of 80% – both the number refinancing and the volume of equity withdrawn via these loans decreased in the first quarter of 2020.
“Workable equity increased 8% year-on-year in the first quarter of 2020 to a record high of $ 6.5 trillion“Graboske said.” Additionally, with mortgage interest rates hitting record highs, 90% of homeowners with workable equity now have senior lien rates above the prevailing market average. But as the first quarter of 2020 saw total refinancing loans soar to a 7-year high, the number of cash refinances, as well as the dollar value of equity withdrawn through refinancing, plummeted for the decade. first time since early 2019. outflows accounted for just 42% of Q1 refinancing loans, roughly half of what was seen at the recent Q4 2018 peak and the lowest such share since Q1 quarter 2016. Similarly, the $ 38.7 billion equity withdrawn from the market via cash-out refinancing decreased by 8% compared to the previous quarter. In addition, rate foreclosure data – a good indicator of lending activity – suggests the trend is likely to continue as the share of withdrawals from refinancing activities continued to decline throughout the second quarter.
“Through June 19, withdrawals refinancing locks were down 6% compared to the comparable period of Q1 2020, while rate / term locks were up 13%, even including the massive wave of refinancing locks observed. early March. The environment is ripe for this surge in rate / term refinancing loans to continue as well. Despite the increase in defaults reducing the number of homeowners who would otherwise meet general eligibility criteria for refinancing, some 13.6 million homeowners still meet these criteria, which include being up to date on their mortgage. , and could reduce their first lien rates by at least 0.75%. by refinancing. Mortgage rates fell to an all-time high of 3.13% on June 18 according to the Freddie Mac Primary Mortgage Market Survey (PMMS); if they declined by just one basis point, that population would increase by 20% to 16.3 million, an all-time high for incentives to refinance. “
Data for the month also showed that the 13.6 million refinancing applicants in the market today could save on average. $ 283 per month on their mortgage payment. If all eligible applicants refinanced their mortgage, they would realize an overall savings of $ 3.9 billion per month, which represents a potentially important and indispensable stimulus for the economy. Of these, some 4.6 million could save at least $ 300 per month on their mortgage payments, while 2.6 million would be able to save at least $ 400 per month. Much more detail can be found in Black Knight’s april 2020 Mortgage monitoring report.
About the Mortgage Monitor
Black Knight’s Data & Analytics division manages the leading national repository of residential mortgage-level loan-level data and performance information covering the majority of the global market, including tens of millions of loans across the country. range of credit products and over 160 million historical records. . The Black Knight HPI is one of the most comprehensive, accurate, and timely home price metrics available, providing essential valuation data at the micro level by covering nearly 90 percent of US residential properties at the zip code level. Additionally, the company maintains one of the strongest public property records databases available, covering 99.9% of the U.S. population and households in more than 3,100 counties.
Black Knight’s research experts carefully analyze this data to produce a summary supplemented with dozens of tables and charts that reflect trends and point observations for the Monthly Mortgage Watch Report. To view the full report, visit: https://www.blackknightinc.com/data-reports/
About Black Knight
Black Knight (NYSE: BKI) is a leading provider of integrated software, data and analytics solutions that facilitate and automate many business processes throughout the homeownership lifecycle.
As a premier fintech, Black Knight is committed to being a premier business partner that customers rely on to achieve their strategic goals, achieve greater success and better serve their customers by delivering the best software, services and information with an unwavering commitment to excellence, innovation, integrity and leadership. For more information on Black Knight, please visit http://www.blackknightinc.com/.
SOURCE Black Knight, Inc.