Cash-out refinancing reached their highest level since the financial crisis
Americans took more money out of their homes through cash refinances in 2020 than in any year since the financial crisis.
U.S. homeowners took in $ 152.7 billion in home equity last year, a 42% increase from 2019 and the most since 2007, according to mortgage finance giant Freddie Mac. It was also a successful year for mortgage arrangements in general: lenders produced more mortgages than ever in 2020, fueled by about $ 2.8 trillion in refis, according to mortgage data firm Black Knight Inc.
Some borrowers viewed re-withdrawals as a way to protect themselves against an uncertain economy last year. Others wanted to build and redecorate, and being stuck at home gave them time to do the paperwork. Homeowners also had more equity to tap: Although house prices tended to fall during economic downturns, they jumped during the Covid-19 recession.
“The support from home equity is unprecedented in helping to mitigate Covid downgrades,” said Susan Wachter, economist and professor at the University of Pennsylvania. “For those who are in a position to refinance, this is a major source of support.
The median price of the existing rose to around $ 310,000 in December, an increase of nearly 13% from December 2019. The acceleration in price growth has spread beyond cities to suburban and rural areas as Americans reassess where they want to live during and after the pandemic.