Freddie: Cash-Out Refi % Rises Again

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 percentage since the second quarter of 1990, according to Freddie Mac.The percentage was up from 86% in the previous quarter and 72% a year earlier, the government-sponsored enterprise said in its quarterly refinance review. "The staying power of refinance activity has been much stronger than we initially thought," said Frank Nothaft, Freddie Mac's chief economist. "But borrowers are reacting to both incentives to cash out home equity through refinance and incentives to change their mortgage as they hit an interest rate adjustment." In the second quarter, 42% of all mortgage applications were for refinancings, down from 44% in the first quarter, Freddie Mac reported.