Mortgage rates have been so low for so long that it is hard to believe nearly everybody hasn't refinanced to a lower rate yet. Believe it. More than 5 million borrowers could both qualify and benefit from a mortgage refinance, according to a new report from Black Knight Financial Services.
True, that is less than the nearly 7 million who could have refinanced just last spring, when the average rate on the 30-year fixed mortgage was below 3.7 percent. Today, thanks to the rout in the stock market, rates have fallen back just below 4 percent. About 2.4 million borrowers could potentially save $200 or more on their monthly mortgage payments and an additional 1.9 million could save $100 to $200 per month. Add it up, and that is $1.2 billion still on the table, according to Black Knight.
"If rates go up 50 basis points from where they are now, 2.1 million borrowers will fall out of the running; a 100-basis-point increase would eliminate another million, leaving only 2 million potential refinance candidates, the lowest population of refinance candidates in recent history," said Ben Graboske, senior vice president at Black Knight Data & Analytics.
In other words, borrowers should act now, as mortgage rates are expected to rise through 2016. While mortgage rates do not follow the Federal Reserve's moves exactly, they will rise with an improving economy and job growth.