Less than 1% of the 53.3 million homeowners in this country carrying a mortgage stand to benefit from refinancing at today’s rates — the tiniest pool of borrowers in at least 22 years.
Just 385,000 high-quality candidates could shave at least three-quarters of a point off their mortgage by refinancing at Thursday’s average rate of 6.02% — the highest rate since 2008— according to figures mortgage technology and data provider Black Knight shared with Yahoo Money.
That’s down from 452,000 last week, 11 million at the beginning of 2022, and an estimated 20 million in 2020. It’s also the smallest candidate pool since at least 2000 when Black Knight first began tracking this metric. Back then, rates were nearly 2 full points higher than they are now, underscoring how the rapid rise in mortgage rates this year shut down the refinance window for most.
“Time has run out for the moment,” Andy Walden, Black Knight vice president of enterprise research, told Yahoo Money.
Higher rates have crushed refinance demand across the country. A separate survey from the Mortgage Bankers Association found that refinance activity was 83% lower than the same week a year ago for the week ending Sept. 9. The share of folks refinancing has dropped nearly every week since the beginning of the year.
That’s also led to layoffs at major lenders.
Redfin announced in June it was laying off 8% of its staff, as demand was off by 17%. Compass, one of the nation’s largest residential brokerages, followed by cutting 10% of its workforce. JPMorgan Chase and Wells Fargo also laid off hundreds from its mortgage divisions due to cooled demand.
At last week’s rates of 5.89%, the few borrowers who could benefit from refinancing could save an average $315 per month, Black Knight data showed, while less than 100,000 candidates would save at least $400 per month.
Black Knight considers a high-quality candidate as a 30-year mortgage holder who has 80% loan-to-value ratio and a credit score of 730 or above.
“Those few folks that still have incentive to refinance out there today have had significantly more incentive over the last decade and haven’t taken advantage,” Walden said. “There’s very little incentive to refinance right now to improve your interest rate. I think the prospects as we move into 2023 may be a little bit better if you see interest rates ease off, but we’re talking about a record low refinance incentive out there in the market right now.”
Gabriella is a personal finance reporter at Yahoo Money. Follow her on Twitter @__gabriellacruz.
Click here for the latest economic news and economic indicators to help you in your investing decisions
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube
Source: Read Full Article
