Cash-out refinancings fell to their lowest level since 2Q04, reported Freddie Mac in its latest cash-out refinance survey for the first quarter.

According to the GSE, 56% of Freddie Mac-owned loans were refinanced into new mortgages that were at least 5% higher than the original loan balances.  This is down from 77% in the fourth quarter 2007.

"A tightening of mortgage underwriting standards throughout the lending industry coupled with declining home values across much of the nation has curtailed the amount of home equity cashed out by homeowners," Freddie Mac Chief Economist Frank Nothaft noted. 

The GSE's Deputy Chief Economist Amy Crews Cutts added that $29 billion in home equity was cashed out through refinancings versus $36 billion in the fourth quarter. "This is about one-third of the amount cashed out in the same quarter a year earlier," Crews Cutts added.

Freddie Mac also reported that the median ratio of new-to-old interest rate was 0.90, meaning that one-half of those borrowers who paid off their original loan and took out a new one decreased their rate by 10%. 

In the third and fourth quarter, the ratios were 1.10% and 1.02%, respectively.  The median age of the original loan was 2.2-years compared to 3.6-years in the previous quarter.

Finally, the median appreciation of the refinanced property was 7%, down from 19% in the fourth quarter and the 24% to 25% area in the prior three quarters.  

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