The Federal Housing Finance Agency’s (FHFA) recent refinance report from Tuesday, reported that just over 510,000 refinances were completed in the Q1 2017, compared to more than 750,767 in the Q4 2016.
The FHFA reports that borrowers completed 13,425 refinances through the Home Affordability Refinance Program (HARP) in Q1 2017, bringing the total amount of HARP refinances to 3,461,096. Of all refinances that quarter, HARP represented 3 percent.
The drop in refinance volume follows a spike in Q3 and Q4 2016. In Q4 2016, total refinance volume jumped from 626,924 to 750,767. This made Q1 2017’s drop all the more dramatic, as refinance volume dropped by nearly 250,000. Overall, refinance volume is still relatively high.
The FHFA found that ten states accounted for over 60 percent of the nation’s HARP eligible loans: Florida, Illinois, Michigan, Ohio, Georgia, Puerto Rico, Pennsylvania, New Jersey, New York, and Alabama. Florida sat at the top of the list, with 15,513 total HARP-eligible loans. Around six percent of refinances made in Florida in Q1 were HARP refinances. In order for a loan to qualify for HARP, it must be owned or guaranteed by Fannie Mae or Freddie Mac, it must have originated before May 31, 2009, its current LTV ratio must be greater than 80 percent, and the borrowers must be current on their mortgage payments.
The FHFA established HARP in 2009, following the Recession, to assist homeowners unable to access a refinance due to a decline in their home value. Since HARP’s inception, Nevada has held the highest percentage of total refinances, with 26 percent of the state’s total refinances being HARP refinances since the program’s beginning. In both Nevada and Florida, underwater borrowers made up over 28 percent of HARP volume in Q1 2017.
Additionally, the FHFA Refinance Report found that the average interest rate on a 30-year fixed-rate mortgage rose to 4.20 percent in March from 4.17 percent in February.
Read the full report here.