During the first quarter of this year, three of four homeowners who refinanced their first mortgages either maintained about the same loan amount or reduced their principle by paying additional money at the closing table, the mortgage underwriter commonly called Freddie Mac said in a release.
Homeowners refinancing shaved an average of 1.2 percentage points for a 30-year, fixed-rate mortgage, saving more than $1,800 in interest a year on a $200,000 loan, the mortgage corporation said.
"The average interest rate on single-family mortgages outstanding at the end of 2010 was about 6 percent, so there are still plenty of homeowners that can benefit from refinancing," said Frank Nothaft, Freddie Mac vice president and chief economist. "We found the typical borrower reduced their interest rate about 1.2 percentage points by refinancing during the first quarter. For a 30-year fixed-rate mortgage with a $200,000 loan balance, that's a monthly payment savings of about $150."
The net dollars of home equity converted to cash as part of a refinance was at the lowest level in 15 years, first-quarter data indicated. In the first quarter, an estimated $6 billion in net home equity was cashed out during the refinance, down from $9.1 billion in the fourth quarter of 2010.