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More borrowers cash out real estate equity

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Sixty percent of Freddie Mac-owned loans that were refinanced in the third quarter resulted in new mortgages at least 5 percent higher in amount than the original mortgages, according to Freddie Mac's quarterly refinance review. That's an increase from the 42 percent of refinanced loans in the second quarter that resulted in cash-outs. "In the latter half of the second quarter and in the first half of the third quarter, 30-year, fixed mortgage rates were above 6 percent, which led to a big fall-off in refinance applications" said Frank Nothaft, Freddie Mac vice president and chief economist. "The largest decline was in homeowners looking to save money by lowering their mortgage rates, since most mortgages already carry very low rates. However, for cash-out refinancers, these low rates were a very cost-effective way for them to finance a big project such as home improvements or to consolidate and pay-off consumer debt." Freddie Mac expects solid growth in U.S. Gross Domestic Product i...