Most homeowners who refinance tap into equity

Real Estate Watch

January 02, 2000

More than two-thirds of homeowners who chose to refinance their mortgage in the third quarter of last year traded their old mortgage for a new one that was at least 5 percent larger.

According to Freddie Mac's quarterly refinance review, 69 percent of refinancing homeowners tapped into the equity in their homes compared with 58 percent who did likewise in the second quarter of 1999.

"Although the housing sector of the economy remains vibrant, interest rates in the third quarter rose from the record-breaking lows experienced over the last few years," said Vassilis Lekkas, principal economist for Freddie Mac.

"This rise in mortgage rates contributed to an expected decrease in the number of loans that were for refinance."

The survey also found that the median age of the original loan was 6.2 years in the third quarter of last year, compared with 5.3 years in the second quarter.

Properties refinanced during the third quarter of 1999 experienced a median house-price appreciation of 21 percent, up from 13 percent in the first quarter.

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