The share of cash-out mortgage refinancings was its highest in nearly 10 years in the first quarter. But rather than being a case of consumers using their home as a piggybank, it is a sign of a rising interest rate environment that is curtailing total refinance volume.
Cash-out refis were 35.9% of mortgages originated in the first quarter, compared with 41.2% for purchase mortgage loans and 25.2% for rate and term refis, according to data from the Federal Housing Finance Agency. The share of cash-out refis was 61%, the highest since the third quarter of 2008, when the share was 65.5%.
Between the fourth quarter of 2005 and the third quarter of 2006, during the height of the housing boom, the cash-out refi share topped 70%.
"This is more due to rate and term refinances dropping, and cash-outs becoming a larger share of the remaining, rather than a massive increase in home equity extraction," MBA Chief Economist Mike Fratantoni said. "So I don't think the 'ATM' appellation is correct," referring to the crisis-era habit of consumers tapping their home equity to pay for cars, vacations and other things.
Median home prices have rebounded from their post-crisis lows. In the first quarter, the national median price for
But that was supported by a lack of homes being placed for sale; there was a 7.2% year-over-year decline in the number of properties on the market.
At the same time, mortgage interest rates have been rising. Rates
