Why Home Refinancing Boom Is Different This Time
By Diana Olick, CNBC Correspondent
NEW YORK ( CNBC) -- U.S. home owners are refinancing their mortgages at the fastest clip since 2005, but the difference now is they are putting cash in, not taking it out.
At the going rate, 25% of all first-lien U.S. mortgages will be refinanced this year, according to LPS Applied Analytics. That represents about $7.1 billion -- just through June of this year -- in savings on monthly payments, according to economists at Freddie Mac, who ran the numbers for this report.
Seven years ago, refinancing wasn't about saving on monthly payments; it was about pulling cash out. Homeowners extracted close to a trillion dollars collectively in home equity in 2005 and largely put it toward home remodeling, swimming pools, cars, vacations and retail spending.Today, 81% of homeowners refinancing their first-lien mortgages either kept the same loan amount or lowered their principal balance by paying-in additional money at closing, according to Freddie Mac.
| More from CNBC
Is Housing Recovering as Much as Everyone Thinks?
Is Housing Risen From Ashes?
Can Wal-Mart Take on Amazon?
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts