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Last updated on February 3rd, 2021 at 11:05 am
LOs, mortgage executives, and economists say all the conditions are right for a string of even bigger quarters, with refinancing driving a record of $ 1.1 trillion in originations in the second quarter.
Data and analytics firm Black Knight, reported this week that there are over 19 million refinance candidates with credit scores of 720 or higher, who hold at least 20% equity in their homes and could shave at least 0.75% off their first-rate lien by refinancing.
These candidates are representing 43% of all 30-year mortgage holders. (There were about 11.7 million eligible homeowners this time last year.)
Black Knight researchers found, If all 19.3 million candidates were to refinance, the average savings would amount to $299 a month, an aggregate of $5.3 billion, more than 7 million could save at least $300 a month, while 2.5 million could save $500 a month or more.
Andy Walden, director of market research at Black Knight said, “Even with everything going on in the broader economy, we’re still seeing record levels of refinancing out there, simply because rates are sitting at 2.86%.”
As per Black Knight, locks on refinance loans that are expected to close in the third quarter (assuming a 45-day lock-to-close timeline) are up 20% from Q2, suggesting that Q3 2020 refi volumes could break all the record-setting by the second quarter.
Will Pendleton, senior managing director of third party originations at Home Point Financial said, “with rates near historic lows, millions of consumers have an opportunity to find savings by refinancing and, in many cases, significantly lowering their interest rate and monthly payments.
We feel that the low-rate environment is likely to persist well into 2021, and a great amount of focus in the lending community is on building capacity to meet the explosion of consumer demand.”
HousingWire was told by several mortgage executives and LOs that some lenders don’t have the infrastructure to handle the existing pipeline, and could struggle to process a greater number of applications in the ensuing quarters.
Stan Middleman, the CEO of Freedom Mortgage said, “I think it’s going to be busy well into next year, if not longer.
“The protracted level of interest rates being low would seem to indicate that, it would be a while until the refis play out.
One of the reasons it was only $1.1 trillion last quarter was that the industry was not built out to the appropriate capacity necessary.”
Reference Source: Housingwire
