Most home owners who refinanced in the second quarter of this year strengthened their fiscal house, according to a Freddie Mac survey showing cash-out refinancing fell to its lowest level in 17 years.
The secondary mortgage market giant said 81% of home owners who refinanced their first mortgage either kept the same loan size or paid down their mortgage. Among these borrowers, 59% maintained about the same loan amount, and 23% reduced their principal balance, Freddie Mac says. The share of borrowers that kept about the same loan amount was the highest in the 27-year history of the analysis.
The median interest rate reduction for refinancing home owners was about 1.5 percentage points, or a savings of about 28% in interest rate, the largest percent reduction recorded in the 27 years of analysis.
“The typical borrower who refinanced reduced their interest rate by about 1.5 percentage points,” said Freddie Mac Chief Economist Frank Nothaft. “On a $200,000 loan, that translates into saving about $2,900 in interest during the next 12 months.”
Source: Freddie Mac