Fewer homeowners are refinancing their mortgages this year, and those who do have different objectives than last year.

Freddie Mac reported this week that 57% of those who chose to refinance in the second quarter took a loan at least 5% higher than the balance on the original mortgage, the same percent as in the first quarter. With a strong housing environment and low interest rates, Freddie expects this trend to continue.

"Anybody who wanted to refinance to save money did it last year," said Brian Carey, an economist with the Mortgage Bankers Association. Homeowners who are refinancing now, he said, are doing so to take cash out of their home or because they were unable to refinance in 1998.

In 1998 and in the first quarter, refinancings accounted for half of total originations. But this quarter the uptick in interest rates has reduced the proportion to 27%.Mr. Carey said that refinancings normally account for 15% to 20% of originations.

"Unless interest rates were to decline back to the 7% range, we're not going to see the levels of refinancing activity that we had been seeing earlier this year," Mr. Carey said.

Homeowners can build equity in their homes in two ways, either by "paying down their original mortgage or with gains due to house price appreciation," Mr. Carey said. Both present opportunities for homeowners to do cash-out refinancings.

Freddie's refinancing study also found that 14% of borrowers in the second quarter, and 13% in the first quarter, refinanced into a loan that was lower than the previous mortgage. The remaining 29% of second-quarter borrowers and 30% in the first quarter refinanced the same balance.

The study examined the refinancing choices among properties for which Freddie purchased both the original and refinanced loans.

Among those holding 30-year fixed rate mortgages, 31% chose 15-year fixed rate loans for the refinancing while 59% kept the new loan at a 30-year fixed rate. Those percentages were the same for both first and second quarters.

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