And the fact that purchase activity was already depressed, so it didn’t have as much room to slip lower.
Still, home purchase loans were off nearly nine percent from 2009 and 62 percent lower than numbers seen in 2006, before everything went so very wrong.
Of course, it wasn’t for a lack of interest; it had more to do with issues holding back homeowners.
The Home Affordable Refinance Program was implemented to address some of these concerns, by allowing homeowners to refinance up to 125 percent loan-to-value, but it has done much less than anticipated.
Who Got to Refinance?
You may be wondering who exactly got to take advantage of the record low rates last year.
Well, the data points to consumers with credit scores of 820 or higher whose loans were originated between 2006 and 2008, when interest rates were relatively high.
This appeared to be the single most important factor – all the more reason to have a great credit score folks.
Refinancing was also much more common in areas that didn’t experience significant home price declines, as LTV constraints shut many out of the market, namely because they purchased homes with zero down or refinanced previously and pulled cash out, thereby zapping their home equity.
Without these limitations, the Fed estimates an additional 2.3 million owner-occupied refinance loans would have been originated in 2010, on top of the roughly 4.5 million actually funded.
Since last year, mortgage rates have touched new lows, spelling more opportunity for those looking to save on their monthly mortgage payments.
But it also means millions more will miss out on the potential savings unless banks/the government ease underwriting standards to accommodate these festering problems.
Perhaps the new underwater refinance program on the way could do some good?
For the record, HMDA data covers roughly 90 to 95 percent of FHA loans and between 75 and 85 percent of other first-lien home loans.