Monday, November 7th, 2011, 3:34 pm
About 82% of homeowners who refinanced in the third quarter either decreased or maintained their principal balance, up from 77% in the previous quarter according to Freddie Mac.
Cash-out borrowers, those who increased their balance by at least 5%, made up 18% of all refinancings in the third quarter, a significant decline from the average of 46% between 1985 and 2010.
Cash-out — or home equity converted to cash — levels also hit a 16-year low at $5.3 billion, down from $6.3 billion in the second quarter and from the peak of $83.7 billion in the second quarter 2006. (Holy Cow! From $83.7 billion in a single quarter to $5.3 today, what a change. -jb)
“Savvy homeowners are taking advantage of some of the lowest fixed-rates in more than 60 years to lock in interest savings,” said Frank Nothaft, Freddie Mac vice president and chief economist.
The median interest-rate reduction was about 1.2 percentage points for a 30-year fixed-rate mortgage. Over the first year of the refinance loan life, these borrowers will save about $2,500 in interest payments on a $200,000 loan, Nothaft said.