Low Mortgage Rates Boost Refinance Activity in Q1

Freddie Mac released the results of its quarterly refinance analysis for the first quarter of this year, showing that borrowers took advantage of better than expected mortgage rates to lower their monthly mortgage payment and shorten their loan term as refinance activity accounted for 63 percent of all single-family originations. Approximately 27 percent of borrowers increased their loan amount when refinancing, either by cashing out equity or consolidating loans, versus 29 percent from last quarter, 17 percent from the same time last year and well below the peak of 89 percent in 2006.

Highlights from the analysis include:
•Of borrowers who refinanced during the first quarter of 2015, 34 percent shortened their loan term, down slightly from the previous quarter.
•The average interest rate reduction in the first quarter was about 1.2 percentage points – a reduction of about 24 percent.
•About 73 percent of those who refinanced their first-lien home mortgage maintained about the same loan amount or lowered their principal balance by paying in additional money at the closing table, about the same as last quarter.
•More than 95 percent of refinancing borrowers chose a fixed-rate loan.
•For all other (non-HARP) refinances during the fourth quarter, the median property value was up 5 percent between the dates of placement of the old loan and the new refinance loan. The prior loan had a median age of 5.6 years, down from 6.8 years in the fourth quarter of 2014.

  1. Rosaria says:

    Thanks for sharing your thoughts on refinance. Regards

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