Refinance Report Underscores Impact of Interest Rates on Refinance Volumes
October 1, 2009
Fannie Mae and Freddie Mac refinanced more than 3.2 million mortgage loans in 2009 through August of this year. In the month of August alone, nearly 360,000 mortgages were refinanced.
Edward J. DeMarco, acting director of the Federal Housing Finance Agency (FHFA), announced the results in FHFA’s monthly report on Enterprises’ refinance volumes and the Administration’s Making Home Affordable Refinance Program (HARP).
“Successful refinancing is a key element of the ongoing efforts to stabilize the housing market,” said DeMarco. “So far, more than 260, 000 homeowners who are current on their mortgage payments have been assisted through the HARP and other streamlined refinance programs administered by Fannie Mae and Freddie Mac. The number is certain to grow as expanded refinance opportunities go into effect this fall.”
In July, FHFA announced the expansion of HARP to allow borrowers with LTVs up to 125 percent to participate. Fannie Mae began accepting deliveries of refinanced whole loans with LTVs over 105 percent up to 125 percent on Sept. 1. Fannie Mae will begin taking deliveries for mortgage-backed securities (MBS) for loans with LTVs over 105 percent up to 125 percent on Oct. 1. Freddie Mac will begin accepting deliveries of these loans on Oct. 1.
This will allow more borrowers to refinance and to do so without added mortgage insurance requirements, a previous barrier to refinancing.
The report, which covers Jan. 1, 2009 through Aug. 31, 2009, shows an increase in refinancing in the first half of the year as mortgage rates dropped. Refinance volumes fell from July to August in response to a sharp rise in mortgage rates in June.
Refinance volumes are strongly influenced by mortgage rates with the effect most visible on a one- to two- month lag.
Operational challenges and capacity constraints on an industry-wide scale have limited HARP loan traction to date but expectations are for increased volume in the months ahead.