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Can Refinances Come Back?

February 06, 2024
Floating
What about rate and term refinances? According to Black Knight, to be counted, you need to have a 720 FICO or above, can only refinance up to an 80 LTV, and would need to benefit by at least 75bp in rate. They estimate that there are 1.7M people who could benefit right now and that this number would go up to 3.8M if rates go to 6%, which is highly likely.

We will be hosting a webinar today at 4:00pm ET with Amir Syed.  He will be discussing what you can be doing in this market today to increase your income right now.  It will also include easy tips on social media to be more effective and gain exposure.  Register HERE.

Please take thirty seconds to fill out our January Housing Index and make sure to share it with your Realtors for their input as well.  We will provide you with a beautiful touch point in the coming week that you can share.  Take the survey HERE.

The Momentum Builder event will be February 20 – 22 at the Park MGM Hotel in Las Vegas.  Barry will be speaking, as well as Danielle Demartino.  You can sign up HERE and use code Highway for $100 off.

Stocks and Mortgage Bonds are both trading near unchanged levels so far this morning.

Refinance Opportunities

Black Knight reported that people have a lot of equity in their home, on average $300,000.  The tappable equity is around $240,000. 

They also said that the combined loan to value that people have on average for mortgage holders is 46%...so there is a lot of equity you can do things with like debt consolidation.

What about rate and term refinances?  According to Black Knight, to be counted, you need to have a 720 FICO or above, can only refinance up to an 80 LTV, and would need to benefit by at least 75bp in rate.

They estimate that there are 1.7M people who could benefit right now and that this number would go up to 3.8M if rates go to 6%, which is highly likely. 

A lot of the higher rates came in the second half of 2023, so we must pass that period of time where the early payoff penalties go away, but you will likely see some good refinance opportunities in the second half of this year.

CoreLogic and Black Knight Appreciation Reports

CoreLogic reported that home prices fell 0.1% in December and are now up 5.5% year over year. 

CoreLogic forecasts that home prices will fall by 0.2% in January and will rise by 2.8% over the next 12 months, which is an increase from 2.5% in the previous report.  It’s also worth noting that they have historically been very conservative.  They originally forecasted that we would see 3% appreciation in 2023, meanwhile we saw 5.5%.  And going back to 2021, CoreLogic forecasted home prices would decline 6.6%, meanwhile we saw 19% appreciation.

Black Knight released their reports for November and December, showing that home values rose 0.1% in each of those months.  Black Knight is showing that home values rose 5.6% year over year.

Technical Analysis

Mortgage Bonds broke beneath the 50-day Moving Average yesterday, but held at support at 100.614, which is the low from yesterday and early December.  Bonds are now trying rise slightly and make another run at the 50-day. 

The 10-year is trading in a trading in a new range after breaking above the 200-day Moving Average yesterday, which was a negative technical sign.  Yields now are in a range between support at the 200-day Moving Average and overhead resistance at 4.20%.  Begin the day floating.

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Debt Consolidation

Show clients how they can take advantage of a cash-out refinance or restructure their debt to save them years of mortgage payments, or demonstrate how debt consolidation can bridge the gap in payment differential on a more expensive home. With personal debt balances at an all-time high, use Debt Consolidation to help your clients achieve their financial goals and gain a better position to build wealth for their family.

Cost of Waiting

Demonstrate how delaying a purchase for even a year or two could cost buyers thousands in appreciation, amortization, equity and more. Increase deal flow by showing clients how delaying their purchase could have more of an impact on their long-term wealth than they realize.