Sunday, August 26, 2012

"Serial Refinancers" and Percent of Refinance Loans with Cash Out

by Bill McBride on 8/26/2012 04:06:00 PM

From Annamaria Andriotis at the WSJ: The Serial Refinancers

To keep up with falling rates, almost 2.2 million homeowners have refinanced their mortgages at least twice since 2009, according to data compiled for The Wall Street Journal by SMR Research, a mortgage-research firm in Hackettstown, N.J.

From 2006 through 2008, some 3.5 million homeowners refinanced at least twice.
...
The last time homeowners were so eager to refinance, it was a more expensive proposition. At the height of the housing boom, 86% of borrowers who refinanced took out cash and ended up with a higher loan amount, according to Freddie Mac.
Refinance activity has picked up again this year, but this is very different from the mortgage equity withdrawal surge during the housing bubble.

Freddie Mac has some great data in their refinance activities reports.

Refinance Cash Out Click on graph for larger image.

This graph uses the Freddie Mac data. This year, close to 60% of loans have no change in the loan balance, and another 20%+ were "Cash-in" refinances (with the borrower putting money into the house to obtain the refinance loan). Last year, in Q4, almost half of all loans were "cash-in"!

Here are the definitions from Freddie Mac:
"Higher Loan Amount" refers to loan amounts that were at least 5 percent greater than the amortized unpaid principal balance (UPB) of the original loan. "No Change In Loan Amount" refers to loans on which the principal balance was unchanged during refinance or loans that increased less than 5 percent of the original loan balance due to the inclusion of closing costs for the refinance. "Lower loan amount" refers to loan amounts that were less than the amortized UPB of the original loan. These three columns may not sum to 100% due to rounding.
Yesterday:
Summary for Week Ending Aug 24th
Schedule for Week of Aug 26th