Refinancing activity reached its highest levels since 2013, jumping 250 percent in the fourth quarter of 2019 over a year earlier, according to a report released Monday by Black Knight.
The analysis, included in the firm’s monthly Mortgage Monitor Report, noted that cash-out lending increased to a 10-year high, though refinancing for better rates and/or terms drove much of the increase.
Many homeowners who refinance are doing so with new lenders, according to Black Knight Data & Analytics President Ben Graboske.
“Despite a surge in refinance lending driven by low rates, servicers continue to struggle in their efforts to recapture refinancing borrowers, with only one in five being retained by servicers in Q4 2019,” said Graboske. “Retention rates rose along with refinance volumes early last year, hitting an 18-month high in Q2 2019, but retention rates have since fallen in each of the past two quarters.”
Additional report findings include:
- Retention rates among rate/term borrowers fell to 24 percent in Q4 2019.
- Retention rates among cash-out refinance lending was even worse, with just 17 percent of cash-out borrower business being retained.
- Borrowers who left for another lender received an average 0.08 percent lower interest rate than those who stayed with current lenders.
- 76 percent of homeowners were either able to keep their interest rate the same or, in many cases, significantly decrease their interest rate through cash-out refinancing, the largest such share since Q4 2016.
“Lenders and servicers should take note – there are currently 44.7 million homeowners with equity available to tap via cash-out refinance or HELOC, with the average homeowner having $119K in equity,” Graboske said. “At $6.2 trillion, total tappable equity – the amount available to homeowners with mortgages to borrow against while still retaining at least 20% equity in their homes – hit its highest year-end total on record.”