The United Kingdom's vote to leave the European Union has created the largest refinanceable population in the United States since late 2012, according to Black Knight Financial Services.
Black Knight said Monday in its monthly Mortgage Monitor Report that there are now 8.7 million people who are potential refinance candidates. Of those people, around 1.2 million borrowers who have 4.25% interest rates and met eligibility criteria saw an incentive to refinance within two weeks of the Brexit vote.
"The reality is that, post-Brexit, mortgage interest rates declined by about 15 basis points — not significant in the grand scheme of things," said Ben Graboske, Black Knight data and analytics executive vice president. "But for 2.8 million borrowers with current rates right at 4.25%, this modest decline was enough to put them 75 basis points above today's prevailing rate, the point at which we consider a borrower to have incentive to refinance."
The Brexit-caused decline in rates should have reduced monthly payments by roughly $15 per month, if all things were equal otherwise. However, the continual increase in home prices across most of the country has offset those savings.
Black Knight also reported that automotive loan debt among mortgage holders has reach $531 billion. On average, auto debt per borrower totaled $20,500, and the share of borrowers with auto debt is at 50%. These figures are the highest ever since at least 2006, Black Knight said.
Furthermore, Black Knight found that borrowers who are seriously delinquent on their auto loans are eight times more likely to be behind on their mortgage payments. But having auto debt in good standing improves the likelihood that a borrower is current on their mortgage: only 4.5% of those with current auto debt become noncurrent on their mortgage versus 5.8% of borrowers without auto loan debt.
