Freddie Study: Cash-Out Refis on Life Support

Consumers extracted just $11 billion in equity from their homes using cash-out refinancing loans in the fourth quarter, the smallest such volume in nine years, according to new figures released by Freddie Mac. "It's not free money any more," said Amy Crew Cutts, the GSE's deputy chief economist. Ms. Cutts said declining home values and a lack of "no cost refis" for consumers have severely hammered the market. "Unless you have been in the house for a long time you may not have much to take out," she said. According to research done by Freddie, cash-out refis by consumers peaked in the second quarter of 2006 when $83.6 billion in equity was taken out of homes. Since then, the amount of money stripped out of homes using refis has fallen steadily. The GSE did find one encouraging trend: in Q4 roughly 33% of borrowers using Freddie Mac loans actually lowered the principal balance on their loans.