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Average refi rate cut is 1.2 percentage points in 1Q.

Freddie Mac reported that the average interest-rate reduction in the first quarter for borrowers refinancing was roughly 1.2 percentage points. That represents a savings of about $2,500 in interest during the next 12 months on a $200,000 home loan.

Borrowers refinancing through the Home Affordable Refinance Program (HARP) got an even bigger break, according to Freddie Mac. Their average rate reduction was 1.8 percentage points. That will provide an average savings of $3,500 in interest during the first 12 months--or roughly $290 a month.

Freddie Mac said that refinance activity accounted for 63 percent of all single-family originations in the first quarter of this year.

Of those refinancing, 34 percent shortened their loan terms. For HARP borrowers refinancing in the first quarter, 36 percent shortened their terms. Freddie reported that during the past four quarters, more than one-third of HARP borrowers have shortened their terms.

In this year's first quarter, $7.7 billion in net home equity was cashed out from refinancing conventional prime-credit mortgages, according to Freddie Mac. The peak for cash-out refinancing came in the second quarter of 2006, when $84 billion was cashed out by borrowers.

The average age of home loans being refinanced shortened in the first quarter compared with the fourth quarter. The median age of loans being refinanced in the first quarter was 5.6 years, down from 6.8 years in the fourth quarter.

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Title Annotation:NEWS ROOM
Comment:Average refi rate cut is 1.2 percentage points in 1Q.(NEWS ROOM)
Publication:Mortgage Banking
Date:Jun 1, 2015
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