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Cash Out Rate Rises Sharply

In the first quarter, 88% of the homeowners who refinanced their homes got a mortgage at least 5% larger than the original loan, the highest such percentage since the third quarter of 1990, according to Freddie Mac.

The percentage was up from 81% in the previous quarter and much higher than the 64% level recorded a year earlier, the government-sponsored enterprise said in its quarterly refinance review.

"The share of all mortgages that were for refinance fell slightly in the first quarter of 2006 to 44% from 45% in the fourth quarter of 2005," said Frank Nothaft, Freddie Mac's chief economist. "... The first quarter of 2006 is the first time in 20 quarters in which the new mortgage rate was higher than the old one for more than half of refinancing borrowers."

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