Increase in Cash-Out Mortgage Refinancing During the Third Quarter

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The net home equity which was cashed out during refinancing of conventional mortgage loans in the third quarter is estimated to be $8.00 billion. This estimate was produced in the 2014 Third Quarter Refinance Report compiled by Freddie Mac. The revised estimate for the net cashed-out home equity in the second quarter of the year is $5.60 billion.

Despite the increase in the volume of cash-out mortgage refinance in the third quarter on quarter-over-quarter basis, it still lower than historic volumes. It is over 10 times lower compared to peak cash-out mortgage refinance volume of $84.00 billion which was reached during the second quarter of 2006. The period between 2010 and 2013 was characterized with the lowest cash-out refinance volumes since 1997.

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Homeowners who refinanced their mortgage loan in the third quarter of 2014 achieved an average reduction of 1.3% in the interest rate which they paid. Based on the data in the report, the economists of Freddie Mac estimated that the homeowners who refinanced their mortgage during this period will save a net amount of $1.5 billion in interest payments throughout the first year of their new loan. Based on the average reduction of the interest rate, the average savings are projected to be 24%.

In the third quarter of this year, the share of borrowers who shortened the term of their mortgage loan through refinancing was 36%. The share of those who maintained their mortgage amount or lowered it through paying extra money upon the closing of the new loan was approximately 72%. Their share decreased from 79% during the previous quarter.
The share of those who opted for cash-out mortgage refinancing during the third quarter of this year was 28%. It rose from 21% during the previous quarter. It was two times larger compared to the same quarter of 2013 when it was 14%.



Christian Calvin mortgage Christian is a contributing writer for He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.


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