Freddie: Equity-Tapping Refis Surge in 3Q

Sixty percent of the homeowners who refinanced their homes in the third quarter tapped into their equity by getting a mortgage at least 5% larger than the original loan, up dramatically from 42% in the second quarter, according to Freddie Mac's quarterly refinance review.The figure was up even further from 34% in the third quarter of 2003, the government-sponsored enterprise said. "In the latter half of the second quarter and in the first half of the third quarter, 30-year fixed mortgage rates were above 6%, which led to a big falloff in refinance applications," said Frank Nothaft, Freddie Mac's chief economist. "The largest decline was in homeowners looking to save money by lowering their mortgage rates, since most mortgages already carry very low rates. However, for cash-out refinancers these low rates were a very cost-effective way for them to finance a big project such as home improvements or to consolidate and pay off consumer debt." Freddie Mac can be found online at http://www.freddiemac.com.