The dollar volume of equity extracted through conforming first-mortgage refinances has fallen to the lowest level in nearly a decade — and possibly longer. The share of cashout refinances rose but was still the second-lowest level on record.
In its first-quarter Refinance Report, Freddie Mac said 28 percent of refinance transactions included cashout.
The report reflects activity where Freddie funded two consecutive refinance transactions. A loan is considered cashout if the principal balance increased at least 5 percent between refinances.
The cashout share was higher at 24 percent in the fourth-quarter 2009 but still the second-lowest share “since the analysis began in 1985.”
A year earlier, the cashout share was 43 percent. It had been as high as 88 percent in 2006.
Based on dollar volume, prime first-lien cashouts tumbled to $8.8 billion from $12.1 billion three months earlier and $19.6 billion a year earlier. It was the lowest level since at least 2001 — the oldest data reflected in the report.
Second-lien cashout volume fell to $5.0 billion from $9.8 billion and the prior year’s $8.0 billion.
Cashin transactions — those where the balance declined on the new refinance — represented 18 percent of first-quarter refinances. The cashin share was just half of its fourth-quarter level but higher than 13 percent in the first-quarter 2009.
