Industry News

Cash-out refinancing activity up, Freddie Mac says

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A full 74 percent of Freddie Mac-owned loans that were refinanced in this year's second quarter resulted in new mortgages with loan amounts at least 5 percent higher than the original mortgage balances, the mortgage giant reported today. Lower than expected interest rates in this year's second quarter spurred the spate of cash-out refinancings, Freddie Mac said. This is in contrast to the first quarter of 2005, when 64 percent of refinanced loans had higher new loan amounts, and was the highest since the fourth quarter of 2000, Freddie Mac said. "Interest rates on 30-year, fixed-rate mortgages dipped lower in the second quarter, spurring refinance activity higher," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement. "Mortgage borrowers took advantage of these low rates by cashing out some home equity before rates go up as they are expected to in coming quarters." Freddie Mac expects home sales to hit a new record again in 2005 as low fixed mortgag...