As mortgage rates keep its position at historical lows and home values continue to rise, a new refinanceable population emerges. According to the Black Knight Financial Services (BKFS), the numbers rose to 4.5 million refinance-eligible borrowers in just a few months. This is the highest recorded data so far in 2017.
The low rates and the uptick in home values should trigger homeowners to refinance their mortgages. Refinancing will help them save more money and build their equity faster. However, this is not the case.
In a report by CNBC, an average homeowner may save about $260 dollars a month from their mortgage should they choose to refinance with today’s rates. Moreover, Around 700,000 borrowers can save as much as $4,000 from their monthly payments.
What is Keeping Them From Refinancing?
What could possibly keep this population from refinancing? Two main reasons may be responsible for this apprehension, the lack of knowledge and the work involved in refinancing. The volume of refinance applications are still 30 percent below last year’s levels. “Our data doesn’t tell us about motivation,” BKFS Data and Analytics Senior Vice President Ben Graboske said. “It leaves us to surmise that the reason is apathy, lack of awareness and education.”
Nearly 5.5 homeowners who remain seriously underwater. These individuals still owe more than what their home is worth. Other borrowers are still struggling with their terrible credit scores. These can be great hindrances to refinancing their home mortgages.
RealtyTracreported that in the first quarter of 2017, seriously underwater properties are down by 1.2 million compared to a year prior. Also, many are getting back on their feet and rebuilding their credit standing. If this trend continues, coupled with the steady low rates, more and more individuals will be eligible for refinancing. MBA Vice President of Research and Economics Lynn Fisher said, “The recent pause in the upward movement of interest rates continues to encourage late-to-the-game borrowers to refinance.”