With a number of borrowers capitalizing on record low mortgage rates to refinance their home loans during the first quarter, the nation's largest lenders claim this caused a major spike in their earnings.
Last month, the refinance index reached a three-year high, according to a report from the Mortgage Bankers Association. Not only was this caused by low rates, but extended government initiatives, such as the Home Affordable Refinance Program and Home Affordable Modification Program, were also major contributors.
"We keep refinancing and coming up with new programs to get to the bottom of the housing market," SNL Financial analyst Nancy Bush told Bloomberg. "This fits into the general narrative that we are not yet out of the market aberrations from 2008 and 2009.
Specifically, during the first quarter, brokers and lenders from Wells Fargo reported $2.87 billion worth of mortgage banking revenue, while JPMorgan Chase set record revenues through HARP.
As banks raked in profits, these programs, as well as other initiatives from the White House and Federal Reserve, saved borrowers an estimated $14 billion during the first three months of 2012. Meanwhile, the average individual borrower saved close to $2,500 by restructuring their loans into more affordable terms.