Sign In

Black Knight’s February Mortgage Monitor: 7.1 Million Borrowers Could Benefit From a Refinance  

Florida Accounted for 26 Percent of Distressed Sales in 2014

April 06, 2015
-    Potential refinance population rate-sensitive; 50 basis point increase eliminates 3 million prospects
-    Lower credit score borrowers refinancing at lowest level on record
-    2014 saw lowest levels of distressed real estate transactions (short sale or REO) since 2007
-    One of every four Florida sales was distressed in 2014; national distressed sale share just 12.7 percent
 
JACKSONVILLE, Fla. – April 6, 2015 -- Today, the Data and Analytics division of Black Knight Financial Services released its latest Mortgage Monitor Report, based on data as of the end of February 2015. Black Knight revisited its periodic review of potential refinance candidates, looking at broad-based eligibility criteria, and found that in light of recent mortgage interest rate decreases, the population of potential refinance candidates currently sits at 7.1 million. However, according to Trey Barnes, Black Knight’s senior vice president of Loan Data Products, this number has the potential to decline should rates climb, even marginally.
 
“Black Knight looked at the population of borrowers whose current interest rates – as well as credit scores and loan-to-value ratios – mark them as good candidates for refinancing,” said Barnes. “In February 2014, there were approximately 4.1 million borrowers who could both benefit from and potentially qualify for refinancing their mortgages. Through a combination of declining interest rates and increased equity among borrowers driven by home price increases, an additional three million borrowers now meet the same broad-based eligibility criteria as compared to one year prior. As of the end of February 2015, there were a total of 7.1 million potential refinance candidates.
 
“Of course, this population is rate-sensitive; in fact, it was largely the decline of 60 basis points in the prevailing 30-year interest rate that resulted in the year-over-year increase in potential refinance candidates. Likewise, if interest rates were to rise by just half a percentage point, three million borrowers would fall right back out of the running as far as benefiting from refinancing their mortgages. Another interesting finding from this analysis: prepayment speeds (historically a good indicator of refinance activity) of lower credit score borrowers – those with scores below 620 – are the lowest we’ve seen since starting to track this data in 2000. As a result, the average loan age for this group is 98 months, as compared to just 38 months and less for borrowers with credit scores of 750 and above.”
 
This month’s Mortgage Monitor also leverages data from Black Knight’s Home Price Index (HPI) to examine 2014 real estate transactions. The data shows that traditional market sales outpaced 2013 levels, although overall real estate sales were down for the year due to a decrease in distressed transactions (i.e., REO or short sales). Nationally, just 12.7 percent of 2014 residential real estate transactions were distressed sales, the lowest such share since 2007; down from 17 percent the year before and a high of 33 percent in 2011. Florida led the country in 2014 with 25 percent of all transactions in the state coming from distressed sales, and in fact, accounted for 26 percent of all distressed sales in the United States. Florida has also seen the lowest level of home price appreciation since the bottom of the market out of all the major “bubble” states (Arizona, California, Florida and Nevada). However, Florida’s REO sales discount of 24 percent (meaning REO properties sell for $0.76 on the traditional sale dollar), while deeper than the other “bubble” states’ discounts, is still lower than the national average of nearly 27 percent.
 
As was reported in Black Knight’s most recent First Look release, other key results include:
Total U.S. loan delinquency rate:  5.36%
Month-over-month change in delinquency rate:  - 3.70%
Total U.S. foreclosure pre-sale inventory rate: 1.58%
Month-over-month change in foreclosure pre-sale inventory rate: - 1.91 % 
States with highest percentage of non-current* loans: MS, NJ, LA, NY, RI
States with the lowest percentage of non-current* loans: MT, MN, SD, CO, ND
States with highest percentage of seriously delinquent** loans:  MS, RI, LA, ME, AL
*Non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.
**Seriously delinquent loans are those past-due 90 days or more.
Totals are extrapolated based on Black Knight Financial Services’ loan-level database of mortgage assets.
 

About the Mortgage Monitor

The Data and Analytics division of Black Knight Financial Services manages the nation's leading repository of loan-level residential mortgage data and performance information on approximately two-thirds of the overall market, including tens of millions of loans across the spectrum of credit products and more than 140 million historical records. The company's research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit: http://www.bkfs.com/CorporateInformation/NewsRoom/Pages/Mortgage-Monitor.aspx
 

About Black Knight Financial Services, LLC

Black Knight Financial Services, a Fidelity National Financial (NYSE:FNF) company, is the mortgage and finance industries’ leading provider of integrated technology, data and analytics solutions that facilitate and automate many of the business processes across the mortgage lifecycle.
 
Black Knight Financial Services is committed to being the premier business partner that lenders and servicers rely on to achieve their strategic goals, realize greater success and better serve their customers by delivering best-in-class technology, services and insight with a relentless commitment to excellence, innovation, integrity and leadership. For more information on Black Knight Financial Services, please visit www.BKFS.com.
 
Media Contact: Michelle Kersch, 904.854.5043, Michelle.Kersch@BKFS.com
Media Contact: Mitch Cohen, 646.546.5103, mitch@mprg.com
 
 
Facebook Google+ LinkedIn Twitter YouTube