Refinancing activity has been stronger than anticipated, but it will slow in the second half of this year to around 35% of originations, according to Freddie Mac chief economic Frank Nothaft."I do expect the refi share to slip lower in the second half of the year, partially because mortgage rates are going higher," Mr. Nothaft said. In the first quarter, refinancings were running at 49% of total originations. In May, the refi share dropped to 41%. Freddie's chief economist said he expects the refi share to drop to 34% in the third quarter. But he just increased his forecast of fourth-quarter refinancing activity to 35% from 30%. Borrowers are still refinancing to extract cash, he said. And borrowers who took out adjustable-rate mortgages in the past two years are refinancing to avoid a significant jump in their monthly payments. Mr. Nothaft's forecast calls for single-family originations to fall 12% to $2.5 trillion in 2006, largely due to a 22% decline in refinance loans. Freddie Mac can be found online at http://www.freddiemac.com.

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