WASHINGTON, Jan. 31 (UPI) -- Almost half of refinancing homeowners in the fourth quarter paid down their debt at the closing in the fourth quarter, a Washington mortgage broker said.
The Federal Home Loan Mortgage Corp., known as Freddie Mac, said 46 percent of homeowners who refinanced October through December brought extra cash to the table to reduce the principal at the closing.
Fewer refinancing homeowners, 35 percent, borrowed more money at the closing, increasing the principal they owed, Freddie Mac said.
It was the highest percentage of homeowners reducing principal since Freddie Mac began tracking the data in 1985.
The high "cash-in" rate was prompted by extremely low interest rates at the beginning of the quarter, Freddie Mac vice president and Chief Economist Frank Nothaft said in a statement.
Low interest rates to start the quarter were "at very low levels, the likes of which haven't been seen in more than 50 years," Nothaft said.
"Consumers are generally shedding debt and mortgages are just another way they're doing it," he said. "Between 2007 and the third quarter of 3010, mortgage debt declined more than $400 billion," he added, citing numbers from the U.S. Federal Reserve.