As of March, the number of refinance candidates had shrunk by nearly half
The number of borrowers who could both likely qualify for and gain a rate benefit from refinancing has declined by 46% since the beginning of 2018, representing of a reduction of almost 2 million refinance candidates, according to the Mortgage Monitor Report released by Black Knight based on data as of the end of March.
The change reflects the continued impact of rising mortgage interest rates. Black Knight said there are currently a total of 2.3 million refinance candidates, the fewest since November 2008, when interest rates were above 6%.
Additionally, the report revealed that borrowers who took out mortgages in the past five years almost no longer have an incentive to refinance to lower their interest rates. Of the nearly 28 million borrowers with 30-year mortgages originated in 2012 or later, fewer than 45,000 have 75 basis points of interest-rate incentive to refinance while also meeting broad-based eligibility requirements.
Affordability has also tightened so far in 2018, according to the monitor. The rate of national home price appreciation has continued to accelerate as interest rates are rising. Black Knight found that median home prices rose by 1.24% nationally over the period. January and February both had their strongest respective single-month growth rates since 2005.
“The rate of appreciation has accelerated by 42 basis points over the past six months and by 72 basis points over the past 12 months,” Black Knight Data & Analytics Executive Vice President Ben Graboske said. “This acceleration, combined with a nearly 40-basis-point increase in the prevailing 30-year fixed interest rate during that same time frame, is creating a tighter affordability climate. We have now seen monthly increases in the national median home price for 27 of the past 28 months, and annual gains for 70 consecutive months.”
