Roughly 22% of consumers who refinanced their first liens in the second quarter also used the opportunity to pay down their mortgage, according to new figures released by Freddie Mac.
The GSE noted that the 'cash-in' refi level recorded was the third highest (a tie, actually) ever since it began collecting such information back in 1985.
In 1Q, the cash-in share was 19% of refinancings.
Recently, National Mortgage News reported that mortgagors owed $9.8 trillion on their home mortgages as of March 31, compared to $10.1 trillion at yearend — the first sequential decline the industry had witnessed in quite some time. (A reduction in servicing balances reduces not only the outstanding mortgage bill for the nation, but it lowers the base of receivables that mortgage bankers can earn servicing fees on.)
Observing the cash-in trend, Freddie economist Frank Nothaft said, "If you pay down your mortgage balance you save the interest you would pay on the loan, about 4.6% percent at today's rates, over the life of the loan versus earning a percentage point or less in CDs and money markets and without the riskiness of stock market investments."
