Freddie: Cash-Out Refi % Creeps Up

In the third quarter, 89% of the homeowners who refinanced their homes got a mortgage at least 5% larger than the original loan, according to Freddie Mac.The percentage was up from 88% in the previous quarter and 73% a year earlier, the government-sponsored enterprise said in its quarterly refinance review. "Mortgage borrowers continue to refinance their mortgages at a higher frequency than historically would have occurred given the rise in mortgage rates over this year," said Frank Nothaft, Freddie Mac's chief economist. "But the wide proliferation of adjustable-rate mortgages originated in the past few years that are nearing their first interest-rate adjustment provides borrowers an incentive to refinance into a lower-cost ARM or fixed-rate mortgage." In the third quarter, 41% of all mortgage applications were for refinancings, down from 42% in the second quarter, Freddie Mac reported.