According to the June Mortgage
Monitor report from Lender
Processing Services, about 6 million Americans are eligible to refinance their
mortgages to take advantage of lower interest rates. According to the report,
the pool of borrowers who can refinance has shrunk 33% from 8.9 million in
March to 5.9 million in June.
The recent jump in the 30-year conventional
fixed-rate mortgage in May and June to roughly 4.5% has reduced the pool of
potential loans attractive for refinance, but the figure still represents at
least 12% of active loans that are potentially "refinance-eligible."
“Refinance-eligible”
borrowers are those who have at least 20% equity in their home, have a credit score of greater than 720 and currently have
an interest rate above 5%.
Refinancing fees for banks have dropped in the
latest quarter with rising rates. These fees had been a steady source of income
for banks for the past several years. According to JPMorgan Chase CFO Marianne Lake, if rates stay at
this level or higher, the refinance market could drop by 30% to 40%. Refinancing
at Wells Fargo represents 56% of
their total mortgage originations in the second quarter, down from 69% in the
first quarter.