Monthly refinance numbers moved in fits and starts throughout 2014, bouncing between a low of 105,059 in March and October's year-to-date high—though the trend in the year's latter half was largely upward as mortgage rates fell to nearly 4.0 percent.
As overall refinancing fell, so too did the number of mortgages refinanced under the Obama administration's Home Affordable Refinance Program (HARP), which targets borrowers with high loan-to-value (LTV) ratios. For November, the GSEs reported a combined 12,429 HARP refinances, putting demand for the program at its lowest point in years.
Year-to-date through November, HARP refinances totaled just 201,337, less than a quarter of 2013's full-year number (892,909).
While FHFA has focused in the past year on marketing the program through town hall-style events and other borrower outreach initiatives, analysts say the drop in HARP activity stems not from lack of awareness, but from a lack of new and eligible homeowners.
"Everybody that has been or could be through that program did it and has moved on," said John Bell, a principal at United Fidelity Funding Corp., a wholesale mortgage lender.
Bell says that at this point, the government would be better served by expanding eligibility requirements, as it already did once in 2012. Though FHFA Director Mel Watt has offered no signal that the agency will create "HARP 3.0" before the program's expiration at the end of this year, it does seem a more likely possibility, given the Obama administration's push to make mortgage credit more affordable.
For Bell—who works out of an office in Irvine, California—the first step would be to raise loan limits for certain high-cost areas. The second would be to loosen some federal regulations, such as the qualified mortgage (QM) rule, which he says has hampered some homeowners who would otherwise be eligible for HARP.
"We'd be really excited to see [HARP] 3.0 come out with expanded loan limits, maybe lower FICO scores, and possibly reduced QM requirements ... on some loans," he said.