MBS: As refis accelerate mortgage servicers lose grip on borrowers
admin | March 6, 2020
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Refinance activity surged to a 6.5-year high during the Q4 2019, but mortgage servicers struggled to recapture business. Less than 25% of borrowers who refinanced to lower their rate or shorten the term did so with their existing servicer. Borrowers with 2018 vintage mortgages were particularly savvy and managed to refinance into rates 8 bp lower on average than those offered by their existing servicer. Cash-out refis hit a 10-year high in Q4 2019 as 600k borrowers tapped $41 billion of home equity. Retention rates for cash-out lending – historically a tougher business to retain – continued to decline, falling to a 4-year low of 17%. There are currently 44.7 million homeowners with an average $119k in equity available to tap via cash-out refi or HELOC while still retaining 20% equity in their homes. That $6.2 trillion in total tappable equity is a new record.
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