Freddie Mac's (FRE) total mortgage portfolio ballooned at an annualized rate of 21% in March, with a surge of refinancing activity fueling purchases of home loans.

The company said its refinance-loan purchase volume stood at $52 billion, making it the largest refinance month since 2003.

This was partly because of the Obama administration's Making Home Affordable Program - an initiative for existing home owners to lower their mortgage rates.

Other government initiatives, such as the Federal Reserve's purchases of mortgage bonds and U.S. Treasurys, have helped bring home loan rates down to record lows, also contributing to the wave of refinancings.

Freddie will fund the loan purchases partly in the capital markets, and, if needed, by the capital offered by the Treasury's senior preferred stock purchase in the company, said Freddie spokesman Michael Cosgrove.

In its monthly report on its mortgage portfolio, Freddie said it expects refinancing volume to stay high in the near term.

The wave of refinancings also showed in mortgage bonds issued by Freddie. The company sold $57.68 billion of guaranteed mortgage bonds in March, up sharply from $29.8 billion. Meanwhile, the mortgage company also saw its single-family delinquency rate continue 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. Its net commitments to buy mortgage bonds totaled $15.8 billion in March, up from $4 billion in February.

Over the past couple of months, the role of Freddie and sibling Fannie Mae (FNM) 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 are still keeping 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.

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