Record 19.4 million homeowners can now save on mortgage refinancing

The average interest rate on the popular 30-year fixed mortgage has hit an all-time high 13 times this year. He did it again last week. This has given current homeowners unprecedented potential to save on their monthly payments through refinancing.

With the latest record low of 2.72% of Freddie Mac’s 30-year weekly fixed average, the number of applicants for “ high-quality ” mortgage refinancing has risen to 19.4 million, according to Black Knight, a provider technology and mortgage data. This is the highest volume ever recorded.

Black Knight defines refinancing applicants as 30-year mortgage holders with at least 20% home equity and credit scores of 720 or higher, who could reduce their rate by at least 0.75%. current first lien when refinancing.

These borrowers can save an average of $ 309 per month by refinancing, for a total of $ 5.98 billion in potential monthly savings, also the highest in history. Although this is an average, some borrowers may save even more, given current interest rates.

Over 4.5 million borrowers can save at least $ 400 per month, and 2.7 million could save more than $ 500 per month, by refinancing at current rates.

“With 30-year rates still at historically low levels, refinancing volumes are expected to remain strong in the coming weeks, especially given the record number of eligible applicants,” said Andy Walden, economist and research director at market at Black Knight. “The third quarter saw a record high for refinancing applications, and consolidated rate foreclosure data from Black Knight’s Compass Analytics and Optimal Blue divisions suggests volumes may also remain at or above record highs in fourth trimester.

While going through mortgage refinancing wasn’t exactly a pleasant experience, given the arduous paperwork involved, 4.6 million borrowers had already done so by the third quarter of this year, according to the Mortgage Bankers Association.

The number of potential refinancing applicants varies among states, populations, and home values. In states with higher costs, borrowers have larger loans and are likely to save more per month through refinancing.

California leads the country in volume, with more than 3 million applicants who could save an average of $ 420 per month for a total of $ 1.3 billion in monthly savings. It is followed by Florida (1.4 million), Texas (1.3 million) and New York (1.1 million).

By city, the greater New York metropolitan area represents the highest savings. Almost 1.4 million high quality refinancing applicants could potentially save $ 606 million per month by refinancing for an average monthly savings of $ 437 per homeowner. The metropolitan areas of Los Angeles, Chicago and Washington DC follow, with 960,000, 723,000 and 575,000 applicants respectively.

While most borrowers still refinance directly, there is a growing potential for large cash refinances, due to record home equity. Home values ​​are booming, due to the high demand for housing resulting from the pandemic. Prices jumped 7% per year in September, according to the S&P Case Shiller National Home Price Index. The amount that potential borrowers can tap, while still leaving 20% ​​in the house, is now near an all-time high.