While the portion of loan applications for refinances has declined and is headed lower, the share of conforming refinances used for cashout held up.
During the second quarter, 83 percent of refinances included cashout of at least 5 percent, according to Freddie Mac's quarterly refinance review released today. That worked out to about $77 billion in extracted equity. The ratio of cashouts was unchanged from the first quarter.
Freddie based its analysis on properties backing at least two successive loans that were acquired by secondary lender, according to the report.
The median loan seasoning of second quarter refinances was 3.5 years, jumping from 2.4 years in the first quarter and representing the most refinance seasoning in nearly seven years.
Freddie Chief economist Frank Nothaft noted rising mortgage rates helped push the refinance share of loan applications down to 42 percent from 46 percent in the first quarter. About half of borrowers who refinanced in the second quarter did so at a higher interest rate.
"We expect refinancing activity to slow further, perhaps as low as one-third of new mortgage applications in the second half of 2007," Nothaft stated.
Amy Crews Cutts, another economist at the government-sponsored enterprise, forecasted a one-third decline in cashout volume later this year.
Freddie projected the 30-year fixed rate to average between 6.6 percent and 6.9 percent during the remainder of the year. The 1-year Treasury-indexed adjustable-rate mortgage is forecasted to remain near 5.6 percent.