by Kristena Hansen, Phoenix Business Journal
August 30, 2012
The combination of surging home prices, record-low mortgage rates and the recent launch of two
government-backed mortgage programs is driving a refinance boom in metro Phoenix, according to a
report released this week by Grand Canyon Title in Phoenix.
The number of home refinance closings throughout Valley in July — roughly 11,500 total — is a
whopping 128 percent hike since January, according to the report, which gathers its data from
Refinance closings — which are when borrowers pay-off their existing mortgage with a new mortgage
for the same property — have also steadily increased each month so far this year in metro Phoenix,
the report said.
Fletcher Wilcox, the report’s author and vice president of business development for Grand Canyon
Title, said the spike is being driven largely by homeowners taking advantage of favorable market
For example, Phoenix-area home values have jumped by nearly 30 percent since last year, according
to June figures from Arizona State University’s W.P. Carey School of Business, while Freddie Mac
reported interest rates for a 30-year fixed mortgage were at an all-time low in July of 3.49
Although mortgage rates have since nudged upward this month — a 3.66 percent average as of Aug. 23
— Wilcox pointed out that such figures are still notably less than last year’s 4.22 percent rate.
The refinance boom, according to Wilcox, is also being instigated by this year’s launching of two
government programs: the Home Affordable Refinance Program, or HARP, and the FHA Short Refinance,
also known as a FHA streamline refinance.
HARP, which began in March but only recently began taking off, is geared for underwater homeowners
who have good payment history and want to reduce their monthly mortgage via refinancing. To qualify,
the existing mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae and the homeowner
must be up-to-date on the mortgage with good payment history for the most recent 12 months. HARP
also requires that the borrower’s current loan-to-value ratio be at least 80 percent.
The FHA program, which began in June, allows qualified FHA borrowers to lower both the up front and
annual mortgage insurance premiums. Program savings average $3,000 annually per borrower, according
to the Department of Housing and Urban Development. The insured loan must be endorsed on or before
May 31, 2009, and the FHA borrowers must be current on their payments in order to qualify.
Lenders, however, may enact more stringent guidelines above the baseline requirements for each