Homeowners Aren’t Waiting Long to Refinance Their Loans

The median age of mortgages refinanced in the first quarter of this year was only 1.6 years, according to a quarterly survey by Freddie Mac, the youngest median age on record since the organization started tracking the maturity of refinanced loans in early 1997.

Most of the loans refinanced during the quarter were originated after the last refinancing boom of 1998-99.

Only 50% of the new loans were for an amount at least 5% more than the original mortgage.

In the first quarter of 2000, when mortgage rates were higher than 8% and refinance volume was much lower, 81% of refinancings were for at least 5% more than the existing loan amount.

“Loans refinanced in this last quarter were much less seasoned than those that were refinanced in 1998-99,” said Vassilis Lekkas, principal economist for Freddie Mac. “Instead, the loans were more similar in age to those refinanced at the end of the long 1992-94 refinancing boom.”

Lekkas cited greater house-price appreciation as a key difference between 1992-94’s refinancing activity and today’s. Higher home prices allow borrowers to take greater advantage of the equity in their homes.

Freddie Mac’s review found homes backing refinanced loans had appreciated by 11% in value since the time the original loans was originated.