home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News


Mortgage News

HOT Topics









site map

twitter linkedin
facebook google+

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

Refinance News | Refinance Share Statistics
News about refinancing programs, pricing and production. Stories about the H o m e
Affordable Refinance Program, H A R P 2.0 and other Making Home Affordable coverage.

$135 Billion Cashouts Last Year

Freddie Mac survey says 56% of Q4 refis had cashout

February 2, 2005


Home equity accessed through conforming first lien refinances fell in the fourth quarter and is expected to keep falling through the end of next year. The outlook changes, however, when second lien activity is factored in.

In its fourth quarter Refinance Review, Freddie Mac found that 56% of its loans that were refinanced included cashout -- where the new mortgage resulted at least 5% higher in amount than the original loan. The figure slipped from a revised 59% in the third quarter, but stands well above the 44% in the fourth quarter 2003.

"The dip in 30-year fixed mortgage rates that happened in the fourth quarter brought down the cashout share of new refinancings even though the total share of refis went up," said Freddie chief economist Frank Nothaft in a written statement. "When homeowners decide to refinance because of falling interest rates, they might take cash out of home equity because it is convenient, but it is not the main reason they are seeking a new loan. As interest rates rise over this year we should see higher cashout shares among refi loans but total dollars cashed-out should be lower than in 2004."

Freddie said falling rates in recent weeks will bring in relatively high refinance activity -- around a 45% share of new applications in the first quarter. But, because only small share of mortgages outstanding have rates above 6.5%, it is unlikely that the refi share will exceed half or maintain that level for long if it does.

The 30-year average, which was 5.7% in January, is expected to end the year between 6.1% and 6.3%, according to Freddie. Nothaft recently said in a conference call that he anticipates refinance loans will comprise 39% of total originations this year and that 75% to 80% of those refinances will include a cashout component, which is about three times higher than in recent years.

Estimated total home equity cashed out in the fourth quarter of $41 billion reportedly dropped from prior quarter's revised cashout estimate of $42 billion. In 2004, the estimated total was about $135 billion, according to Freddie.

Freddie estimates the amount of home equity cashed-out through prime, first lien refinances will drop to $96 billion this year and lower to $61 billion in 2006.

Freddie's findings contrast reports of strong home equity lending at many major mortgage players.

Wells Fargo said healthy demand in its home equity products ranked it No. 1 in home equity loan market share for the fourth year in a row. At ABN AMRO Mortgage Group, November volume reversed a descending trend due in part because it "is experiencing increased consumer interest in...home equity and second mortgage products." For Chase Home Finance, home equity loan volume almost doubled over the past year.

Much of the disparity between Freddie's numbers and the strong numbers being reported by mortgage bankers lies in the lien position; while Freddie is reporting first mortgage cashouts, much of today's home equity production is being generated through second liens.

Nothaft expects home equity lending to remain a strong component of the market, but dampen as the year progresses with rising rates.

The value of refinanced properties appreciated 15% by the time the loan was made, down slightly from 17% in the third quarter, but higher than 12% a year earlier, according to the review.

The median age of loans refinanced in the fourth quarter was reported at 2.2 years, four months younger than in the prior quarter.

The estimates were based on a sample of properties on which Freddie has funded at least two successive loans.

Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.

email: [email protected]

SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter


mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders