'Homeowners Not Over-Leveraged'

Concerns that homeowners tapped themselves out during the recent refinance binge are overblown, according to Washington area mortgage banker Robert Broeksmit.Far from being over-leveraged and becoming a drag on the economy, consumers have "rearranged their balance sheets" and are now "in an even better position" to keep the country humming for years to come, the president of B.F. Saul Mortgage Co. said at the Mortgage Bankers Association's National Secondary Market Conference and Expo. Even though an uptick in interest rates has "choked off" refinancing for the moment, homeowners "still have room to leverage up" because the typical borrower's loan-to-value ratio is below 60%, Mr. Broeksmit said during a panel session. Rather than spending their equity on frivolous items, consumers who have refinanced have exhibited financial prudence, he also said, pointing to a study by the New York Federal Reserve that found only 16% of the $450 billion in withdrawn equity has been laid out for travel and automobiles. The rest was put into home improvements, paying off high-cost debts and investments in stock and real estate, according to the study.