Almost one in five homeowners carry mortgages with interest rates of 8 percent and higher — nearly double today’s rates of about 4 percent.
Moreover, many of these borrowers are late on their payments and are not taking advantage of refinancing programs widely available, according to nonprofit community group NeighborWorks America.
The overseer of Fannie Mae and Freddie Mac has an ongoing campaign to educate local housing leaders about refinancing programs sponsored by the government that can help struggling homeowners.
According to the Federal Housing Finance Agency, nearly 770,000 homeowners are eligible for cheaper loans through its Home Affordable Refinance Program, or HARP. Qualifying for this government-sponsored program could save homeowners an average of $200 a month, or $2,400 a year, the agency said.
However, even homeowners who aren’t struggling to make payments could benefit.
Overall, there are more than 7 million U.S. mortgage borrowers with rates of 4.5 percent or higher who could qualify for — and benefit from — refinancing their mortgages, according to Black Knight Financial Services, a mortgage analytics company.
Refinancing through HARP has been a key component of the U.S. housing market recovery. But with mortgage rates just below 4 percent, their lowest point of 2014 and their lowest level since mid-2013, HARP loan activity is dropping.
In the third quarter of 2014, 44,136 refinances were completed through HARP, bringing the total refinances through HARP from the inception of the program to 3,233,061.
There were fewer HARP loans that closed in October than during any month since “HARP 2”, the re-configured version of the program providing wider eligibility, launched four years ago. Yet, HARP-refinanced households can save more than 35 percent annually on their mortgages.
HARP expires at the end of 2015.