Homeowners in the U.S. are sitting on $5.7 trillion in equity borrowing potential according to Black Knight, a mortgage-data and technology company. This is a record high. When coupled with low mortgage rates, it’s not surprising that cash-out refinances are near their highest levels since 2007. Freddie Mac has previously reported that approximately 8 out of every 10 refinances happening have the homeowner taking cash-out of their home’s equity.
Some experts predicted that cash-out refinances would drop after new federal tax laws eliminated the interest deduction for equity loans unless the money is spent on home improvements that will raise property value. However, any declines due to these changes in tax law have apparently been countered by favorable borrowing rates.
Today, conforming no-point 30-year fixed mortgage rates are averaging 4.125 percent, 15-year rates are near 3.625 percent and the 5-year ARM is averaging 4.00 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.