Prepayments, apparently spurred by the recent retreat in interest rates, soared in May. Black Knight Financial Services, in its "first look" at the month's mortgage performance data, said there was a 23 percent increase in prepayments, historically a good indicator of refinancing activity, from April to May, bringing the incidence to the highest so far in 2017, 1.06 percent.
The company said the first quarter of this year was a bad one for refinancing, with originations falling 45 percent from the fourth quarter of 2016 as interest rates took off. However, the easing of rates over the last few months may change the outlook for the second and third quarters, a projection that seems to be confirmed by the increase in prepayments.
With rates back below 4 percent, Black Knight said the number of homeowners that could benefit from refinancing is at the highest level this year, 4.4 million, an increase of 1.6 million just since mid-March. These refinancing candidates could save an average of $260 per month on their mortgage payments with 2.5 million saving between $100 and $300 each month and nearly three-quarter million realizing a reduction of $400 or more.
May data shows delinquencies reversing their April increase, declining 7.13 percent month-over-month and by 10.78 percent since May 2016. The delinquency rate is now 3.79 percent, with 1.93 million mortgages 30 or more days past due, but not in foreclosure. This is 145,000 loans fewer than in April and 226,000 fewer than a year earlier. Of the total, 562,000 are seriously delinquent, over 90 days past due but not in foreclosure.
Foreclosure starts increased in May by 5.68 percent to 55,800 loans. The foreclosure inventory, loans that are actively in foreclosure, declined by almost 3 percent from April and nearly 27 percent from May 2016 and now represents 0.83 percent of mortgage homes. The number of properties in foreclosure at the end of May was 421,000. Both the foreclosure inventory and the number of properties that were seriously delinquent hit 10-year lows during the month.
At the end of May there were 2.35 million properties that were 30 or more days past due or in foreclosure, down 379,000 from a year earlier.
The highest rate of delinquencies was in Mississippi at 10.16 percent, a -8.4 percent annual change. The state was distantly trailed by Louisiana at 8.68 percent. Just 2.12 percent of Colorado borrowers are past due on mortgage payments, the lowest rate of any state.
Black Knight will provide a more in-depth review of this data in its monthly Mortgage Monitor report, which will be published on July 10.
The above chart is what we use to determine the amount of money refunded at the time of a FHA to conventional refinance. FHA charges an upfront MIP (mortgage insurance premium) amount of 1.75%, a sizeable refund when you do it after 6-18 months from original purchase. Southern Californians are among the few states' area to appreciate enough to get rid of both the monthly MI (often higher than your taxes!) and get a nice refund! As an example, let’s say you purchased your home 15 months ago and paid an upfront mortgage insurance premium of $1,750. If you sell your home or refinance in month 15, you may be eligible to receive 52% of that amount back, or $910. So how do you request this refund? Read moreAnd don't forget to call Anne James at 562 619-2058 to see if you're eligible to refi and the same or lower rate, drop the monthly MI and recieve a nice refund!