About 6.5 million borrowers could likely qualify for and benefit from a traditional refinancing or the HARP program, according to a new report released from the Black Knight Financial Services Inc.
About 3 million borrowers alone could save at least $200 a month via traditional refinances. About 500,000 borrowers stand to save $500 or more per month, the report shows.
"By looking at current interest rates on existing 30-year mortgages and applying broad-based underwriting criteria, we found that approximately 6.1 million borrowers make good candidates for traditional refinancing," says Ben Graboske, senior vice president of Black Knight's data and analytics.
"An additional 450,000 meet HARP-eligibility guidelines. All told, in the aggregate we're looking at about $1.5 billion that American home owners could be saving every month through a traditional refinance. Add in the 450,000 HARP-eligible borrowers and that figure swells to about $1.66 billion in savings every month -- almost $20 billion a year."
But refinancing is very rate-sensitive. If rates rise just half a percentage point, 2.6 million borrowers fall out of that population where refinancing would be beneficial, unless they can find a way to protect themselves from fluctuating mortgage rates, Graboske notes.
The Black Knight report also looked at the overall current state of home affordability. Just a 1 percent rise in interest rates would impact home affordability as much as a 13 percent jump in home prices, according to the report.
The monthly mortgage payment on a median-priced home is similar to what borrowers paid in 2000-2003. Monthly payments are down $400 from 2006 levels.