More than 4.9 million homeowners could see a drop in their interest rates if they refinanced their mortgage, according to a new analysis from Black Knight, an analytics provider. That’s up 1.6 million from one week ago.
Freddie Mac reported last week that 30-year fixed-rate mortgages dropped to 4.06 percent, down from 4.28 percent the week before. It was the biggest drop in rates in more than a decade.
“While this will certainly impact buying power and housing demand as we enter the spring homebuying season, it’s also had a massive impact on refinance incentive almost overnight,” Black Knight notes in its report.
The savings on their mortgage may come at a good time, since equity is starting to soften. Homeowners lost $229 billion in equity last quarter and $348 billion in the quarter prior to that, according to Black Knight’s Mortgage Monitor report. “The decline is being driven by falling home prices in some of the nation’s most expensive markets,” says Ben Graboske, president of data and analytics at Black Knight.
The strongest declines were seen among homeowners with more than 20 percent equity in their homes. “The loss of equity is more a matter of reduced borrowing power than a significant increase in equity stress on the market,” Black Knight notes.
For example, average home prices in California dropped by more than $14,000 in the second half of 2018. The Golden State has seen a 9 percent decrease in tappable equity, according to Black Knight. However, California still holds 37 percent of all tappable equity in the country, and six-and-a-half times as much as Texas, the next highest state, the report notes.
Source: Black Knight and “Mortgage Rate Drop Opens Refi Door for Nearly 5 Million Homeowners,” Forbes.com (April 1, 2019)