Industry News

Borrowers cash out real estate equity

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The number of borrowers who refinanced to cash out home equity remained steady during the first quarter, according to Freddie Mac's quarterly refinance review. In the first quarter of 2004, 43 percent of Freddie-Mac owned loans that were refinanced resulted in new mortgages at least 5 percent higher in amount than the original mortgages. In the fourth quarter of 2003, 44 percent of refinanced loans had higher new loan amounts. During the second quarter of 2003, when fixed-rate mortgages were still falling, 33 percent of refinanced loans were for cash out and the number of loans being refinanced was considerably higher. "Mortgage rates remained low throughout the first quarter of this year but were higher than we saw last summer," said Frank Nothaft, Freddie Mac chief economist. "With mortgage rates above the 46-year low of last June, the refinance volume is less than last summer's. The share of cash-out refis tends to rise when overall refinancing activity slows down because fewer b...