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Lower Mortgage Rates in November Increase Refis

Refinances by the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac increased in December 2017, according to the Fourth Quarter Refinance Report released by the Federal Housing Finance Agency (FHFA) on Wednesday.

Together, both the GSEs completed more than 446,295 refinances during the quarter. The report indicated that the increase in refis during the last month of 2017 was on the back of mortgage rates remaining below the levels observed at the beginning of the year. In December, mortgage rates increased to 3.95 percent from 3.92 percent the month before, the report indicated.

In December, the GSEs completed 6,309 refinances through the Home Affordable Refinance Program (HARP), representing 1 percent of total refinance volume during the month. After adding the December numbers, the total refinances by Fannie Mae and Freddie Mac through this program from the time of its inception stood at over 3.4 million.

According to the report, from inception to December 2017, more than 2.9 million loans refinanced through HARP were for primary residences, 110,562 were for second homes and 462,325 were for investment properties.

Over the year, borrowers with loan-to-value ratios greater than 105 percent accounted for 19 percent of the volume of HARP loans. The report indicated that 26 percent of HARP refinances for underwater borrowers were for shorter-term 15- and 20-year mortgages, which build equity faster than traditional 30-year mortgages.

Other highlights of the report included:

  • HARP refinances represented five or more percent of total refinances in Nevada and Florida—more than double the two  percent of total refinances nationwide over the same period.
  • In December, 5 percent of the loans refinanced through HARP had a loan‐to‐value ratio greater than 125 percent.
  • Borrowers who refinanced through HARP had a lower delinquency rate compared to borrowers eligible for HARP who did not refinance through the program.
  • Nine states and one U.S. territory accounted for over  70 percent of the Nation's HARP eligible loans with a refinance incentive as of September 30, 2017.

About Author: Radhika Ojha

Radhika Ojha, Online Editor at the Five Star Institute, is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her master’s degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Dallas, Texas. You can contact her at Radhika.Ojha@theMReport.com.

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