Freddie Mac says refinancing led to larger loans

Real Estate Watch

March 18, 2001

A majority of homeowners who refinanced their homes in the last three months of 2000 took new mortgages that were at least 5 percent higher than their original mortgages, thanks to lower interest rates, according to Freddie Mac's quarterly refinance review.

Seventy-eight percent of Freddie Mac-owned loans that were refinanced were for amounts greater than 5 percent of the original mortgage, up 1 percent when compared to the like quarter in 1999. However, the percentage was down from 82 percent who refinanced in the third quarter in 2000.

Freddie Mac economists continued to attribute the strong refinancing market to a favorable interest rate environment for borrowers.

Refinancing made up 30 percent of all loan originations in the fourth quarter, compared with 22 percent for the like period in 1999.

The median age of those loans refinanced in last year's fourth quarter was 4.9 years, and the property had appreciated 28 percent from the time the loan was originally made.

Freddie Mac is a government-chartered company that buys and sells mortgages on the secondary market and helps makes funds available to lenders.

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