Freddie Mac reported last week that, in the first quarter of 2007, 82% of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts at least 5% greater than the original loan amounts. This is unchanged from the fourth quarter of 2007, but down from the third quarter's 87%. Freddie Mac Chief Economist Frank Nothaft attributed the relative strength to the mortgage rate levels that are favorable to home equity loans indexed to prime. At a differential of over 2%, this "difference provides a big incentive to borrowers to use cash-out refinance as an alternative to home equity loans," he said.

The refinance share of applications averaged 46% in Q107, which was also unchanged from Q406, and up from 41% in Q306, reported the GSE.

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