GSE Rates of Refinancings Drop in Summer, Says FHFA
After a spike in mortgage interest rates in June, refinancings sponsored by Fannie Mae (FNM) and Freddie Mac (FRE) declined through the summer, the Federal Housing Finance Agency (FHFA) reported. From May to June, the average interest rate increased 56bps from 4.86% to 5.42%. Despite the increase, the June rate was lower than November 2008’s rate of 6.09%, when the Federal Reserve announced its mortgage-backed securities (MBS) purchase program. The government-sponsored enterprises (GSEs) have seen about 93,000 refinanced loans through the Making Home Affordable Refinance Program (HARP) this year, a portion of the more than 3.2m total refinancings completed in 2009. But since reaching a peak of around 600,000 in June, monthly refinancings have trailed off, and there were nearly 359,000 refinancings in August, according to FHFA data. In August, the average interest rate on conventional 30-year fixed-rate mortgages (FRM) of $417,000 or less decreased 1bp to 5.3%, the FHFA said. The FHFA also reported the average rate for a 15-year FRM increased 3bp to 4.92% in August. The data is calculated from the FHFA’s monthly interest rate survey. The survey, conducted at the end of August, reflects market conditions in mid to late July due to the lag time between when a borrower locks in a mortgage rate and the loan closes. While the sample pool of only adjustable-rate mortgages (ARMs) was too small to calculate an average rate, the contract rate on the composite of all mortgage loans — FRM and ARM loans — was 5.23% in August, down 2bps from 5.25% in July, the FHFA said. Write to Austin Kilgore.