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Homeowners with mortgages prior to 2008 still have opportunity to refinance

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Mortgage rates recently shot up to 6 percent, all but drying up the pool of homeowners who’d benefit from refinancing.

Mortgage technology and data provider Black Knight reports just 472,000 homeowners — mostly borrowers who obtained mortgages in 2008 or earlier — have an opportunity to save by refinancing. That’s down immensely from the roughly 20 million homeowners in 2020 who were able to take advantage of rock-bottom rates. The data provider estimates these borrowers could save an average of $309 per month if they refinanced today.

Black Knight categorizes these borrowers as “high-quality refinance candidates,” meaning they have credit scores of 720 or higher, at least 20 percent equity in their homes, are current on their mortgage payments and stand to shave at least 0.75 of a percentage point off their existing mortgage rate.

While rates on refinances are currently lower than those on purchases, they’re still significantly higher than they were even just six months ago. Currently, the average rate on a 30-year mortgage refinance is 5.800%, according to Bankrate.

What you can do

If you’re one of the few with an older loan and considering a refinance:

  • Shop around. Refinance rates and closing costs vary by mortgage lender, so get at least three bids.
  • Understand the breakeven point. That’s the moment at which the savings in monthly payments offset the closing costs. This refinance breakeven calculator can help you decide.
  • Don’t chase the lowest rate. While the goal, of course, is a lower rate, make sure that benefit isn’t overwhelmed by closing costs. In this rising-rate environment, some lenders are now charging costly points in order to offer more attractive rates.
Written by
Ruben Caginalp
Associate writer
Ruben Çağınalp is an associate writer for Bankrate, focusing on mortgage topics.
Edited by
Mortgage editor