Mortgage refinance candidates cut by half in the past four months

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The number of mortgage borrowers for whom it made sense to refinance declined by nearly half since the end of last year and is at its lowest since November 2008.

Approximately 2.3 million mortgagors are candidates for a refinance, a decline of 2 million, or 46%, between December and April, according to the latest Black Knight Mortgage Monitor.

Looking only at those who took out a mortgage in the past five years, very few have a reason to seek a rate and term refinance. Of the nearly 28 million borrowers with 30-year mortgages originated in 2012 or later, fewer than 45,000 have an incentive of at least a 75-basis-point difference between their existing loans and where rates currently are to refinance while at the same time still meeting eligibility requirements, Black Knight said.

Since the start of the year through last week, the average interest rate on the 30-year loan rose 60 basis points to 4.55%, according to Freddie Mac.

Meanwhile, home prices are continuing to increase, with nearly all, 97%, of the 916 core based statistical areas Black Knight tracks having annual price increases in the first two months of 2018.

"At the national level, home prices rose 1.24% since the start of 2018, with both January and February having their strongest respective single-month growth rates in 13 years," Ben Graboske, Black Knight data and analytics executive vice president, said in a press release. "As of the end of February, home prices had risen 6.65% from a year ago, a metric that continues to increase. 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.

"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."

But this doesn't mean every market has the same rate of home price growth.

"While almost all markets are seeing home prices rise, rates of appreciation vary across the country with the highest being seen in Western states. In fact, of the 11 markets with price gains of 10% or more, all 11 are in the Western United States. Across the country, we see an approximately 60-40 split in the number of markets experiencing home price appreciation versus those with some degree of deceleration," he said.

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Refinance Mortgage rates Home prices Housing market Real estate Black Knight