A rise in shorter-term refinances and lower cash-out volume has contributed to the rebound in home equity, according to a report from Freddie Mac.
The government-sponsored enterprise said in its third-quarter refinance report that borrowers reduced their interest rate by an average of 1.3 percentage points through refinancing.
More than one-third of borrowers refinanced into shorter-term loans, allowing them to pay down their principal more quickly and build equity.
Cash-out activity increased from the previous quarter, rising 39%, to $7.8 billion. But it remained well below its peak of $84 billion in the second quarter of 2006, just before the financial crisis.
Separately, Black Knight said on Monday that recent rate reductions for 30-year mortgages have expanded the number of homeowners eligible for refinancing by approximately 25%.
Additionally, the Jacksonville, Fla.-based analytics firm said that half of all borrowers have equity of least 30% in their homes.
