In the fourth quarter of 2009, 33 percent of borrowers who refinanced their loan lowered their principal balance, resulting in the highest “cash-in” share since Freddie Mac began tracking the characteristics of refinance transactions in 1985, according to the company’s refinance report.
Consistent with the cash-in share, the report showed that the share of borrowers who increased their loan balance by 5 percent or more during the fourth quarter was at a record low of 27 percent.
“Rates on 30-year fixed-rate mortgages set a new record low during the first week in December at 4.71 percent and over the quarter averaged just 4.9 percent in Freddie Mac’s Primary Mortgage Market Survey®,” said Frank Nothaft, Freddie Mac vice president and chief economist. “One-half of borrowers who refinanced their conventional loan during the quarter lowered their annual mortgage interest rate by at least 0.9 percentage points below the old rate. In aggregate, the lower interest rate translates into about $2 billion in payment savings for these homeowners over the first 12 months of the new loan.”
Source: Freddie Mac
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