Home Affordable Refinancing Program loans totaled one-third of Freddie Mac's refinance fundings in the second quarter, the highest share since the program’s inception.
HARP enhancements resulted in additional refinance volume during the second quarter. According to a Freddie Mac analysis, 81% of homeowners who refinanced their mortgage either maintained the same loan amount or lowered their principal balance by paying in at the closing table in the second quarter.
Of those borrowers who refinanced, 59% maintained the same loan amount, while 23% reduced their principal balance. The share of borrowers who kept the same amount was the highest in the 27-year history of the analysis.
The net dollars of home equity converted to cash as part of a refinance, adjusted for consumer-price inflation, fell to the lowest level since the second quarter of 1995.
About $5 billion in net home equity was cashed out during the refinance of conventional prime-credit home mortgages, substantially less than during the peak cash-out refinance volume of $84 billion during the second quarter of 2006.
The median interest rate reduction for a 30-year, fixed-rate mortgage came in at about 1.5%, the largest percent reduction recorded in the history of the analysis.
“On a $200,000 loan, that translates into saving about $2,900 in interest during the next 12 months,” Freddie's Chief Economist Frank Nothaft, said. “Fixed-rate mortgage rates hit new lows during June, with 30-year product averaging 3.68% and 15-year averaging 2.95% that month.”