American Mortgage Blog

In the last few weeks interest rates have been relatively stable, but slightly declining. Market concerns over weaker economic growth in the near term that could lead to a decrease in inflation have sparked a drop in bond yields and mortgage rates followed. For instance, several economic indicators have either met or are below what analysts forecast for them. Rising consumer sentiment, which in turn tends to lead to a willingness to spend and stimulate the economy, has not happened.  As a result, interest rates for 30-year fixed mortgages this month were the lowest of 2011, per Freddie Mac.

Freddie Mac recently reported that during the first quarter of 2011, only 25 percent of those who refinanced existing mortgages pulled cash out of their home.  Even more striking, 21 percent took out smaller loans than the ones they were refinancing.  The percentage of home owners whose loan balance remained unchanged, 54 percent, was the highest since Freddie Mac began keeping track of such figures in 1985. (Freddie Mac defines a "cash-out" mortgage as one in which the new principal balance exceeds the old one by more than 5 percent.)