May Sees Drop in Refinances as HARP Volume Hits 2013 Low

As expected, refinance volume experienced a dip in May as mortgage rates started to climb.

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According to the ""Federal Housing Finance Agency's"":http://www.fhfa.gov/ (FHFA) monthly Refinance Report, ""Fannie Mae"":http://www.fanniemae.com/portal/index.html and ""Freddie Mac"":http://www.freddiemac.com/ together recorded 418,004 refinances in May, a drop from 463,587 in April but still well above May 2012's 341,185.

Out of that number, 84,648 refinances--about 20 percent--were completed through the Home Affordable Refinance Program (HARP). Since the program's inception, the GSEs have reported more than 2.65 million HARP refinances.

Year-to-date through May, HARP refinances made up 60 percent of total refinances in Nevada and 51 percent of total refinances in Florida. Nationally, HARP refinances made up 21 percent of total refinances year-to-date as of May 31.

Other states reporting high HARP share from January through May include Georgia (45 percent of total refinances), Michigan (40 percent), and Arizona (39 percent).

In May alone, 39.9 percent of HARP volume came from underwater borrowers with loan-to-value (LTV) ratios of higher than 105 percent. Deeply underwater borrowers (those with LTV ratios of greater than 125 percent) accounted for 18.5 percent of May's HARP refinances.

Year-to-date through May, approximately 2.3 million HARP refinances were for primary residences, while 84,889 were for secondary residences. An estimated 288,958 HARP refinances were for investment properties, FHFA reported.