A full 89% of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least 5% higher than the original loan, according to Freddie Mac's third quarter cash-out refi report. This compares to 88% in the second quarter. Additionally, Freddie noted that this is the highest refinance percentage since the second quarter of 1990.
Freddie Mac Chief Economist Frank Nothaft observed that borrowers continued to refinance their mortgages at a higher frequency than historically given the increase in mortgage rates this year. He attributes this to the high level of ARM originations over the past few years, which are approaching resets. He added that borrowers are also favoring the take-out of equity versus a home equity loan - which tend to have an interest rate tied to prime.