Black Knight: Cash-Out Refis Hit Highest Share Since 2008

Thanks to low interest rates, nearly 300,000 cash-out refinances were originated in the third quarter of 2015, marking six consecutive quarters of rising cash-out refi volumes, according to Black Knight Financial Services’ most recent Mortgage Monitor report.

What’s more, roughly 1 million cash-out refis were originated during the 12 months ended Dec. 31, according to the report.

Of all of the first-lien refis originated in the third quarter, about 42% were cash-out – the highest share since 2008, according to Black Knight.

The average cash-out amount was more than $60,000, the highest since 2007, the firm reports.

“All totaled, there was $64 billion in equity tapped via cash-out refinances over the past 12 months – the highest dollar amount for any equivalent 12-month period since 2008-2009,” says Ben Graboske, senior vice president of data and analytics for Black Knight, in a statement. “Even so, this amounted to less than two percent of available equity being tapped. This is slightly below the post-crisis norm and 80 percent less than the total amount of equity extracted from the market in 2005-2006.

“The resulting loan-to-value (LTV) and credit score risk of recent cash-out refinances remains low, as well – average credit scores on cash-out refinances are 748, and the resulting post-cash-out average LTV of 67 percent is the lowest level on record,” Graboske adds.

The report also takes a look at the relationship between rising interest rates and rising home prices and how those might impact affordability. For more, click here.

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