Freddie Mac's (FRE) total mortgage portfolio ballooned at an annualized rate of 21% in March, as the company's refinance-loan purchase volume increased to $52 billion.

This is the first month of the U.S. government's initiative for existing homeowners to lower their mortgage rates under the Making Home Affordable Program.

In a monthly report released Friday, Freddie - a participant in the program - said this was its largest refinance month since 2003.

Freddie expects refinancing volume to stay up in the near term as more homeowners take advantage of this opportunity to lower their mortgage rates and monthly payments.

Meanwhile, the mortgage company also increased its commitments to buy mortgage bonds to $15.8 billion in March from $4 billion in the previous month.

Also, its single-family delinquency rate continued to go up under the dual impact of its foreclosure program being suspended and the broader economic slowdown.

Freddie said its delinquency rate rose to 2.29% in March from 2.13% in February.

Freddie noted that these numbers may be slightly skewed due to the temporary moratorium on its foreclosure program, which means loans stay delinquent instead of moving on to foreclosure. The company didn't reveal the extent of the impact.

Even then, delinquency rates continue to rise to record highs for the mortgage-finance giant and are an indication of the extent of decline among prime borrowers with conforming loans. The delinquency rate was at 0.65% at the end of 2007.

Meanwhile, in March, Freddie's total investment portfolio was at $867.1 billion, nearly 31% annualized growth year to date.

Over the past couple of months, the role of Freddie and sibling Fannie Mae have diminished in the mortgage market as both the U.S. Treasury and the Federal Reserve have emerged as backstop buyers with deep pockets.

The U.S. Treasury, so far, has bought nearly $125 billion of agency mortgage-backed securities, while the Federal Reserve has bought $381.185 billion and announced that it would buy up to $1.25 trillion worth of these bonds this year.

However, market participants still keep tabs on Fannie and Freddie's portfolios as an indication of their financial health and their ability to continue to play a role as both guarantors and buyers of mortgage bonds.

Other details in the monthly report show that Freddie's issuance of guaranteed securities and pass-through certificates increased to $57.68 billion from $29.8 billion in February, as the refinancing volume picked up.

The company's total mortgage portfolio increased 3% in February to $2.246 trillion.

The duration gap, a measure of the portfolio's sensitivity to interest rates, averaged one month in March.

-By Prabha Natarajan, Dow Jones Newswires; 201-938-5071; prabha.natarajan@dowjones.com