Industry News

Cash-out refinancings hold steady

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A full 72 percent of Freddie Mac-owned loans that were refinanced in the third quarter resulted in new mortgages with loan amounts that were at least 5 percent higher than the original mortgage balances, the mortgage giant reported today. This share is unchanged from the second quarter of 2005. "Interest rates on 30-year fixed-rate mortgages remained low, averaging 5.76 percent, in the third quarter while the prime rate, key to home equity lending and lines of credit, rose to 6.75 percent," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement. "The sharp rise in the cost of home equity lines of credit and the expectation that mortgage interest rates will go higher over the next year induced homeowners to look towards the refinancing option to extract home equity for home improvements or other investment purposes now." "We are forecasting that home equity extraction from the refinancing of prime first mortgage liens will result in an extraction of $20...