Refinances appear to be cooling off after volume levels decreased in August, while mortgage rates rose for three consecutive months through July, according to the Federal Housing Finance Agency's (FHFA) August 2015 Refinance Report.
The report showed that the average interest rate on a 30-year fixed rate mortgage declined to 3.91 percent in August.
According to the FHFA, 7,496 refinances were completed through the Home Affordable Refinance Program (HARP) in August 2015, which brought the total to 3,350,410 since the program began.
HARP volume accounted for 5 percent of total refinance volume in August, the report says.
Borrowers with loan‐to‐value ratios greater than 105 percent accounted for 24 percent of the volume of HARP loans from the January 2015 to August 2015. On the other hand, 8 percent of the loans refinanced through HARP had a loan‐to‐value ratio greater than 125 percent.
From January 2015 to August 2015, 29 percent of HARP refinances for underwater borrowers were for shorter‐term 15‐and 20‐year mortgages. These type of refinances build equity faster than traditional 30‐year mortgages.
The report found that in Florida and Georgia, HARP refinances represented 12 or more percent of total refinances from January 2015 to May 2015. This was more than double the 5 percent of total refinances nationwide over the same period.
FHFA also noted that borrowers that use the HARP program to refinance appear to have a lower delinquency rate compared to borrowers that are eligible for HARP but do not use the program.
The FHFA's Q2 Refinance Report showed that HARP refinances held steady during this quarter, nearly matching up with the number recorded in the first quarter.
The report found that second quarter HARP refinances completed between April and June reached 31,561, a difference of 87 from the 31,648 HARP refinances completed from January through March. Additionally, HARP volume represented 5 percent of total refinance volume in the second quarter of 2015.
The Mortgage Bankers Association (MBA) reported in August that mortgage applications received a 3.6 percent boost from refinance activity.
"Concerns about the Chinese economy pushed interest rates down last week, resulting in a two basis point decline in thirty year fixed interest rate, bringing the rate down to its lowest since May 2015," said Lynn Fisher, MBA's VP of Research and Economics. "The pick-up in refinance activity was led by larger loan sizes on average, as continued investor interest drove jumbo interest rates down even further, by five basis points."
Click here to view the FHFA's August 2015 Refinance Report.