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M REPORT | 59 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA 8.8M Borrowers Have Saved $14B by Refinancing Since the start of the pandemic, homeowners have reduced their mortgage payments by more than $1.3 billion per month through rate and term refinances. S ince the start of the pandemic homeowners have faced many chal- lenges—but according to Black Knight Inc. saving money on mortgages has not been one of them. According to Black Knight's September Mortgage Monitor 8.8 million mortgage holders have saved upwards of $1.3 billion a month, or $14 billion in total savings, since the start of the pan- demic by refinancing their homes to take advantage of ultra-low interest rates. Black Knight also estimates that by the end of 2022, those borrow- ers will have realized nearly $35 billion in aggregate savings, with the potential for nearly $16 billion per year in continuing, ongoing economic stimulus. "The record low interest rate environment driven by the na- tion's COVID-19 response resulted in nearly 9 million homeowners initiating rate and term refinances over the first 18 months of the pandemic," said Ben Graboske, the President of Data Analytics at Black Knight. "Together, these borrowers reduced their aggregate mortgage payments by more than $1.3 billion per month, for some $14 billion in realized monthly savings to date. In fact—assuming they all stay in their homes for the duration of 2022— this group is on track to save nearly $35 bil- lion in total by the end of next year. By nearly any measure, that is an extraordinary level of poten- tial stimulus to the economy as a direct result of refinance lending." While 8.8 million borrow- ers completed a rate and term refinance, 5.5 million additional borrowers completed a cash-out refinance to tap into their equity, which is now makes up most of the refinance volume due to the fact that interest rates have been slowly ticking up due to signal- ing from the Federal Reserve that they may elect to raise rates soon. "Keep in mind, that's on top of the $322 billion homeowners tapped via 5.5 million cash-out re- finances during the same period. More than half of the nation's $9.1 trillion in tappable equity is still held by homeowners with first-lien rates above 3.5%, meaning the potential exists for continued growth in that segment—which has been driving the majority of refinance activity for months now," Graboske continued. "Plus, more than 70% of tappable equity is held by borrowers with credit scores of 760 or higher, which cre- ates opportunities for lower-risk cash-out lending products, even as rates rise. Though almost all recent cash-outs have resulted in rate reductions, in late 2018—when 30-year rates were close to 5%— more than 70% of cash-out bor- rowers accepted rate increases to access the equity in their homes. It would not be surprising to see similar behavior among 'equity- centric' borrowers as we move forward into 2022." While recent rate hikes have pushed 3.4 million borrowers out of the refinance window because of their already low mortgage rate, Black Knight estimates that there are still 11.5 million 30-year mortgage-holders that meet credit requirements who could both qualify for a rate and term refi- nance and cut their first-lien rates by at least 0.75%. Other data found in the report: Delinquencies dropped by 2.25% in September to 3.91%, the lowest it has been since the start of the pandemic. Foreclosure starts dropped by 3,200 after seeing a noticeable up- tick in August when foreclosure moratoria expired and is within 6% of the record low set in April 2021. The foreclosure rate now stands at 0.26% as active foreclosures dropped by 7,000 in September to 135,000, the lowest Black Knight has recorded since 2020. The national delinquency rate fell below 4% in September for the first time in 18 months as mort- gage performance continues to gradually improve. This was offset by delinquencies rising 7,800 in FEMA-declared disaster areas of hurricane-impacted Louisiana and by 11,000 in the state as a whole. 1,239,000 loans remain in for- bearance (representing $231 billion), which represents 2.3% of all active mortgages; additional declines are expected as early forbearance entrants continue to reach the end of their terms in the coming months. More than 450,000 ad- ditional expirations are expected through the end of 2021 based on current forbearance guidelines, representing more than a third of active plans.