There was just $9.5 billion of home equity that was taken out of properties in a
Borrowers who shortened their loan term made up 31% of 2Q13 refis, up 3% from 1Q13, while 65% kept the same term and 4% got a longer term loan. Coincidentally, 65% of borrowers whose original loan was a 30-year fixed-rate mortgage refinanced into another 30-year FRM, while 12% moved into a 20-year FRM and 23% into a 15-year FRM.
More than 95% of all refis went into a fixed-rate product. The only group of borrowers that sought an adjustable-rate loan in significant numbers had a hybrid ARM, and 21% of this group got another hybrid ARM. Few if any borrowers across all categories refinanced into a one-year ARM or a balloon loan.
Freddie Mac said the average interest rate reduction was 1.9 percentage points. On a $200,000 loan, the borrower will save $3,700 in interest over the next 12 months.
Chief economist Frank Nothaft said, "Borrowers' refinance characteristics remained fairly consistent with the previous quarter. The cash-out amount, while increasing, continues to remain low by historical standards.
“On net, borrowers will save approximately $6 billion in interest over the next 12 months, which they can put towards savings, paying down debt or supporting additional expenditures. Further, the estimated $9.5 billion in 'cash-out' activity will further augment borrowers' investment and consumption spending."
