Released: May 03, 2006

Homeowners taking more cash on re-fi

Source: By Kirstin Downey, Washington Post

A greater proportion of mortgage refinancers tapped their home equity for cash in the first three months of this year than in any other quarter in the past 15 years, according to an analysis released yesterday.

About 88 percent of people refinancing their homes took out loans for at least 5 percent more than their original balances, according to the latest quarterly review of loans owned by Freddie Mac, a government-backed home mortgage company. However, more than half took loans at higher interest rates than they previously paid. In years past, refinancers chased lower rates.

The refinancing activity comes as interest rates are rising. By refinancing, some homeowners can get out of adjustable-rate loans on their first or second mortgages or their home-equity lines of credit and switch to fixed-rate loans. It is the first time in more than five years that borrowers as a group are paying higher interest rates after refinancing, according to the report.

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