In the fourth quarter of 2007, 81% of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least 5% higher than the original mortgage balances, according to Freddie Mac's quarterly refinance review. The revised share for the third quarter of 2007 was 86%. "Home-value declines coupled with tougher underwriting standards at many lenders contributed to a decline in the amount of home equity cashed out as part of a conventional loan refinance during the fourth quarter," said Frank Nothaft, Freddie Mac vice president and chief economist. "At the same time, rates on jumbo mortgages for prime borrowers became relatively much more expensive compared to conforming rates, averaging 7.1% for 30-year fixed-rate loans in December, about a full percentage point above rates on a comparable conforming product. These higher rates on jumbo loans put a damper on refinance activity and reduced the overall volume of originations." He said families refinancing in the Midwest were less likely to engage in cash-out activity compared to the rest of the nation. In the Midwest last year, 76% of borrowers who refinanced their prime, conventional mortgage also cashed out some home equity, compared with 86% of borrowers in the Northeast and 87% of refinancers in the South and West.

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