Home values are on the upswing, and home owners who are becoming equity-rich are taking advantage of their property’s increasing worth. Cash-out refinances surged 68 percent in the second quarter compared to a year ago and have reached the highest volume in five years, according to Black Knight Financial Services.
“People realize that refinancing these funds is extremely inexpensive and that rates will eventually rise, so they’re capitalizing on the strength of home-price appreciation,” says Ben Graboske, senior vice president at Black Knight Data & Analytics.
Borrowers today are also using more restraint. The average loan-to-value ratio of today’s cash-out refinancers is 68 percent, which means borrowers have leveraged 68 percent of the home’s current value. That marks the lowest level in a decade.
Source: “Homes as ATMs: It’s Starting Again,” CNBC (Oct. 5, 2015)