Low Mortgage Rates Spur Refinances

Total refinance volume between Fannie Mae and Freddie Mac increased in April due to falling mortgage rates, according to the Federal Housing Finance Agency (FHFA).

The report also found that mortgage rates decreased in April, falling from 3.69 percent in March to 3.61 percent. Total refinances from the GSEs in April were 168,212, and total refinances this year are 597,697.

According to the FHFA, 6,347 refinances  were complete through the Home Affordable Refinance Program (HARP), bringing total refinances from the inception of the program in 2009 to 3,406,890. HARP refinances represented four percent of total refinance volume.

The FHFA found that 6 percent of the loans refinanced through HARP had a loan‐ to‐value ratio greater than 125 percent, and borrowers with loan‐to‐value ratios greater than 105 percent accounted for 22 percent of the volume of HARP loans.

Twenty six percent of HARP refinances for underwater borrowers were for shorter‐term 15‐ and 20‐year mortgages, the FHFA said. In addition, HARP refinances represented 10 or more percent of total refinances in Florida and Georgia, more than double the 4 percent of total refinances nationwide over the same period.

HARP was established April 1, 2009 to assist homeowners unable to access a refinance due to a decline in their home value. The program is designed to provide these borrowers with an opportunity to refinance by permitting the transfer of existing mortgage insurance to their newly refinanced loan, or by allowing those without mortgage insurance on their previous loan to refinance without obtaining new coverage.

HARP enhancements took effect in 2012 to increase access to the program for responsible borrowers. The program was scheduled to expire on December 31, 2013, and was extended to expire on December 31, 2015. On May 8, 2015, HARP was extended again to expire December 31, 2016.