Cash-out refinances on the rise
Posted on Tuesday, October 13, 2015 at 9:10:20 AM
Residential financing borrowers have been making the most of a combination of relatively low interest rates and equity available in their homes.
Black Knight Financial Services, Inc. released its Mortgage Monitor Report, which concluded that cash-out refinance volumes surged close to 70 percent year-over-year in the second quarter. This was the highest volume in cash-out refinances seen in five years, making it clear that borrowers are taking advantage of the equity still available to them. However, second quarter cash-out refinances still remained around 80 percent lower than they were at their peak in the third quarter of 2005.
The total equity of mortgage holders has increased by around $1 trillion since last year, and ?usable equity totals around $4.5 trillion. These days borrowers are pulling out an average of $67,000 of equity through cash-out refinances. This is close to levels seen in 2006. Most cash-out refinances were identified in California - more than 30 percent, the most in the country. Texas was next in line with around 7 percent of the total.
Black Knight also collected data on refinances in general. It found that borrowers are saving an average of $136 in principal and interest each month through refinances, while cutting their interest rates by slightly over 1 percent.