The volume of cash-out refinance loans hasn’t been this high since 2008, but experts say when put into context, there’s no cause for alarm.
According to recent data from Freddie Mac, the share of refinances that involved cash extraction climbed to 77% in the second quarter of 2018. But, the amount of equity cashed out totaled $15.8 billion – well below the $75-$85 billion we saw in the years leading up to the crisis.
A blog by Washington, D.C. think tank the Urban Institute said that while on its face the growing share does seem worrisome, there is no cause for concern when you break it down.
For one, home price appreciation and rising interest rates play a major role. Home values have been rising an average of 6 to 8%, giving homeowners a major incentive to…