Additionally, Black Knight's data shows:

• 14.3 million homeowners have refinanced during the pandemic, with more than 600,000 refis closing in each of the past four months. This has put the market on pace for nearly 8.9 million such transactions this year, just shy of the record 9 million set in 2020
• Nearly 9M of these homeowners completed rate/term refinances over the first 18 months of the pandemic, saving an aggregate $1.3 billion per month

"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," says Ben Graboske, president of Black Knight’s Data & Analytics division. "In fact – assuming they all stay in their homes for the duration of 2022 – this group is on track to save nearly $35 billion in total by the end of next year. By nearly any measure, that is an extraordinary level of potential stimulus to the economy as a direct result of refinance lending.

But now, due to the rising rate environment, the dynamics of the refinance market are changing, with a sharp shift away from rate/term refinance lending to cash-outs. That’s not to say rate/term refinance incentive is dead, though–even with Freddie Mac’s PMMS reporting the average 30-year rate at 3.14% yesterday, there are still nearly 10 million high quality candidates who could cut their interest rates by at least 0.75% by refinancing.

Further, tappable equity is at an all-time high of $9.1 trillion and while 25% is held by borrowers with sub-3% interest rates, more than half of that total is held by homeowners with first lien rates of 3.5% or higher, providing significant opportunity in the cash-out space.

Lastly, Black Knight's research shows that when 30-year rates were near 5% in late 2018, more than 70% of cash-out borrowers accepted rate increases to access their equity, which may be consequential in coming months given the more than 11 million tappable equity holders who've locked in sub-3% interest rates. More than 70% of that available equity is held by homeowners with credit scores of 760 or higher, which creates opportunity for lower-risk cash-out lending.