Cash-outs regained a sliver of their shrinking share of the refinance business for Freddie Mac-owned loans this quarter, the company reported, coming in at 43 percent of all refinances.
This share ranks second-lowest of any quarter dating back to 1997. Only fourth quarter 2002 came in lower, at 41 percent, according to the quarterly refinance review released by the McLean-Va.-based company.
However, the share of cash-outs may be distorted by the record refinance application activity; the Mortgage Bankers Association of America reported that refinance applications reached their highest level ever during March. If the number of cash-out transactions remained the same as prior quarters, the record refinance applications still would have pushed down the cash-out share. As rates rise and refinance applications fall, the share of cash-outs will likely soar.
A loan is considered a cash-out if the refinanced amount is at least 5 percent higher than the original mortgage. In the statement, the company presented information by quarter dating back to the beginning of 1997.
Cash-outs as a share of total refinances topped out at 82 percent in third quarter 2000. They represented 60 percent of total refinances for first quarter 2002, the statement said.
First quarter 2003 also marked the next-to-lowest median age of refinanced loans reported by the company, 1.9 years. The only quarter with a lesser age in the last five years was first quarter 2001, at 1.6 years, the statement said. Fourth quarter 2002 median age was reported at 2.9 years.