More elected to refinance their homes

Real Estate Watch

June 27, 1999

Last year, almost half of the homeowners who refinanced their mortgages did so for amounts at least 5 percent higher than the balance owed, according to Freddie Mac's annual refinance review.

Although the percentage was lower than in 1997, when 59 percent of refinancings were for 5 percent higher or more, the total number of loans refinanced last year was higher.

With lower interest rates in 1998 -- the average 30-year fixed-rate mortgage was 6.94 percent, down from 7.6 percent in 1997 -- homeowners who refinanced were able to lower their mortgage rate by 18 percent vs. 8 percent in 1997.

"Compared to previous refinancing booms, such as the one in 1993, more borrowers are taking advantage of the stronger housing market to take out accumulated equity," said Vassilis Lekkas, principal economist for Freddie Mac.

Lekkas said the average value of refinanced property grew by 10 percent last year, while in 1993 the value of refinanced properties had grown by only 2 percent.

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