Freddie Mac reported today that, in the first quarter of 2007, 82% of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least 5% greater than the original loan amount. 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 that are indexed to prime. At over a 2% differential, this "difference provides a big incentive to borrowers to use cash-out refinance as an alternative to home equity loans," he said.

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