Freddie: Cash-Out Refis Hit 4-Year Low

Freddie Mac has reported that only 56% of the homeowners who refinanced their homes in the first quarter got a mortgage at least 5% larger than the original loan, the smallest cash-out refi percentage since the second quarter of 2004. The percentage was far lower than the 77% recorded in the previous quarter and the 83% recorded a year earlier, the government-sponsored enterprise said in its quarterly refinance review. "A tightening of mortgage underwriting standards throughout the lending industry, coupled with declining home values across much of the nation, has curtailed the amount of home equity cashed out by homeowners," said Frank Nothaft, Freddie Mac's chief economist. "While equity conversion is down, regular refinance activity has stepped up. Fixed mortgage rates reached four-year lows and prompted large volumes of refinancing in the first quarter: more than half of borrowers who refinanced into a fixed-rate mortgage lowered their mortgage rate in the first three months of the year." Freddie Mac can be found online at http://www.freddiemac.com.