Consumers pulled $6 billion of equity out of their homes through cash-out refinancings in the first quarter, the lowest reading in 15 years, according to figures compiled by Freddie Mac.
In Q4 mortgagors took $9.1 billion in equity out of their homes. Cash-out refis – once one of the hottest trends in the industry – peaked in the second quarter of 2006 with $83.7 billion in equity drawn.
Research conducted by the GSE also found that 75% of consumers who refinanced in the first quarter either kept their loan balance the same, or reduced it. Roughly 21% of refi customers engaged in a ‘cash-in’ refi where they brought money to the closing table in an effort to either reduce their monthly payments or shorten length of the loan.
The refinance and cash-out market has been hammered by declining home values and tighter loan underwriting standards. Some housing analysts believe home prices won’t begin turning around until 2012 at the earliest.
“Consumers continue to reduce their debt, either by paying down or paying off their mortgage loan, or reducing the interest cost,” said Frank Nothaft, vice president and chief economist for the GSE.
According to figures compiled by National Mortgage News and Quarterly Data Report, the total dollar amount of mortgage debt outstanding in the U.S. fell to $9.6 trillion at yearend, compared to a peak of $10.1 trillion at the end of 2009.
