Throughout the housing market slump and the recession, many homeowners suffered financially, though some were able to refinance their initial mortgage. According to real estate records, Freddie Mac announced that 84 percent of homeowners who refinanced were able to maintain their loan amount or lower their balances in the fourth quarter of the year.
Despite slipping from 85 percent when compared to the percentage from the fourth quarter of 2011, 46 percent of borrowers maintained their loan amount and 39 percent reduced their principal balance from their original loan amount. The government-sponsored enterprise revealed that the average interest rate reduction was around 1.8 percentage points, providing a savings of about 33 percent in rates, marking the largest reduction in report history.
Homeowners that have enlisted refinancing help through the Home Affordable Refinance Program had an average interest rate reduction of 2 percentage points when selecting a 30-year fixed-rate mortgage. The median depreciation in property value inflated 29 percent in the fourth quarter from the original loan.
"While all borrowers that refinance have benefited, HARP has enabled many borrowers that traditionally would not have had access to refinance to obtain low rates and significantly reduce their interest rate and monthly payment," said Frank Nothaft, vice president and chief economist of Freddie Mac. "This increases the likelihood that these borrowers will continue to perform on their loan and remain homeowners.