Mortgage holders miss out on savings
June 29, 2017 – Nearly 4.5 million borrowers are eligible to refinance and lock in savings on their monthly mortgage payments but haven’t done so, according to a new report from Black Knight Financial Services.
The average borrower stands to save $260 a month, and nearly 700,000 borrowers could save $400 or more per month, the report shows.
However, a rise in interest rates could put current homeowners who did refinance in a bind: Even if they want to move, they may decide it’s unaffordable if their current low interest rate will rise by a point or two when they secure a new loan for a bigger house. The owners who did not refinance, even if they could, won’t have that issue holding them back.
“The recent pause in the upward movement of interest rates continues to encourage late-to-the-game borrowers to refinance,” says Lynn Fisher, the Mortgage Banker Association’s vice president of research and economics.
Why aren’t many current homeowners not refinancing?
“Our data doesn’t tell us about motivation,” says Ben Graboske, senior vice president of data and analytics at Black Knight Financial Services. “It leaves us to surmise that the reason is apathy, lack of awareness and education.”
Some homeowners may still be underwater on their home loans and unable to refinance yet, owing more than what the home is currently worth. Other owners may have a low credit score blocking them from taking advantage of lower rates.
Still, owners likely will have more time to take advantage of today’s low mortgage interest rates.
“I don’t think this will be the last opportunity [to refinance into a low rate], but I don’t have a crystal ball,” says Graboske. “There are enough pressures in the market – lenders getting more efficient – that we’re going to have competitive rates around for a while.”