Freddie Finds 4Q Refis Cut Rates by a Lot

Freddie Mac’s just-released fourth-quarter refinance data show refinancing borrowers were able to take advantage of the deepest rate cuts available in quite some time during the period.

The data show that the median interest rate reduction during the fourth-quarter 2012 period was 1.8%, representing a 33% reduction in the previous rate. This was the largest percentage reduction in 27 years.

Eighty-four percent of borrowers’ refinances either reduced or maintained their debt, a percentage just shy of the 85% record set in the fourth quarter of 2011.

Net inflation-adjusted dollars converted to cash through the refinancing process during the period totaled $8.1 billion, a stark contrast to the record $84 billion seen at the market’s peak during the second quarter of 2006.

Depreciation for Home Affordable Refinance Program loans during the period, which had a median age of 5.9 year, was 29%.Thirty-year loans refinanced through this program into new 30-year products saw their rates reduced on average by 2%.

Non-HARP loans refis, which had a median age of 3.7 years, saw little or no fluctuation in median property value although depreciation did vary by region.