The refinance volumes decreased at Fannie Mae [1] and Freddie Mac [2] in Q1 according to the Federal Housing Finance Agency’s [3] (FHFA’s) first-quarter Refinance Report [4]. Together, the Government Sponsored Enterprises (GSEs) completed 356,003 refinances in the first quarter of 2018 compared with 446,295 refinance transactions in the fourth quarter of 2017.
The report attributed the decrease in refinance volumes to rising mortgage rates that increased to 4.44 percent from 4.33 percent in February. Mostly recently Freddie Mac reported that mortgage rates had risen to their highest level in seven years to 4.61 percent.
The report also indicated that 4,139 loans were refinanced through the Home Affordable Refinance Program (HARP) bringing the total number of HARP refinances to more than 3.4 million since the program began in 2009.
During the first quarter, 34 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. Although HARP is scheduled to expire at the end of 2018, the FHFA said that 73,868 borrowers could still benefit financially from this program. The report revealed that borrowers who had refinanced through HARP had a lower delinquency rate compared with borrowers eligible for HARP who did not refinance through the program
“These borrowers meet the basic HARP eligibility requirements and have a remaining balance of $50,000 or more on their mortgage, a remaining term on their loan of greater than 10 years, and a mortgage interest rate that is at least 1.5 percent higher than current market rates. These borrowers could save an average of $2,290 annually by refinancing their mortgage through HARP,” the FHFA said.
Regionally, the report found that nine states and one U.S. territory accounted for more than 70 percent of borrowers who remain eligible for HARP and have a financial incentive to refinance as of December 31, 2017. These regions include Illinois, New Jersey, Michigan, Florida, Puerto Rico, Pennsylvania, Alabama, Maryland, and Georgia.