Lowering Mortgage Rates Will Save Borrowers Billions

This study seems straight forward. Lower interest rates this year will save $11.5 billion for mortgage borrowers.

More than two million borrowers have managed to lower their monthly payments.

Americans are dramatically reducing their debts and upping their savings.

From bizjournals.com:

The study said more than $1 trillion in U.S. mortgages were financed between January and June, which included $790 billion in refinancings. The refinancings in the first half of this year should result in $2.3 billion of savings for borrowers.

It also showed that median monthly payments for refinanced loans fell by 10.5 percent, or $120, from previous monthly mortgage payments, which should help shield against future foreclosure for some.

FROM REUTERS.com:

Entitled "How the U.S. Consumer Has Benefitted from Mortgage Finance Programs
in 2009," the study by Mark Fleming, Ph.D. and chief economist for First
American CoreLogic, examines the effect of the Federal Reserve's interest rate
reductions and government refinance programs on refinance activity and the
results in increased consumer disposable income. Using data from the First
American CoreLogic public-record database, which covers 96 percent of the U.S.
population, the study analyzes more than 2.2 million residential mortgage
refinances that occurred between October 2008 and June 2009. With the use of
public-records data on sale and mortgage transaction activity, the First
American CoreLogic study estimates the degree of debt burden reduction and the
magnitude of dollars saved as a result of refinancing. The study projects
that this refinance activity will result in $2.3 billion of mortgage payment
savings for borrowers who refinanced in the first six months of 2009.
According to the study, the median individual monthly savings was $120, a 10.5
percent reduction from the median borrower's previous mortgage payment. Over
the next five years, the total benefit to homeowners who refinanced in 2009
will grow to $11.5 billion.

"The quantitative easing policies of the Federal Reserve and refinance
activity made possible by the Home Affordable Refinance Program (HARP) have
allowed more than 2 million consumers to reduce their monthly mortgage debt
obligations and put more money in their pockets," said Fleming. "This
permanent increase in monthly income is likely to, in part, be used to
increase consumption and help to drive growth as the economy rebounds.
Additionally, these refinanced loans are likely to be more sustainably
affordable debt obligations. The combination of lower payments and fixed-rate
terms should also reduce the risk of future foreclosure."