A recent report showed that cash-out refinances hit a 15-year high in the second quarter. That trend shows no signs of slowing down.
According to a new report from Black Knight, cash-out refinance lending is up more than 41% over the last three months. The report showed that cash-out refinance rate locks were up 7.6% in August over July, which also saw a significant increase in cash-out refi rate locks.
The increase in cash-out refi rate locks was enough to drive an increase in overall mortgage rate locks, as a decline in purchase and an increase in rate and term refinances basically canceled each other out. According to the report, purchase fell by 0.8%, while rate and term refinances increased by 0.5%.
Overall, rate locks increased 1.3% in August over July. This marks the third month in a row that rate locks have increased. Mortgage activity also increased in July and June.
The increase in cash-out refis in August was enough to push the refinance share of the mortgage market back above 50% for the first time since February.
According to Black Knight Secondary Marketing Technologies President Scott Happ, interest rates remaining low helped drive some “high-credit-score and high-balance borrowers” to refinance in August.
"The rise in cash-out lending is hardly surprising given the extraordinary growth we've seen in tappable equity this year," Happ said.
"We've now seen cash-out activity increase for three consecutive months, and with $173,000 in equity available to the average homeowner with a mortgage and home prices still climbing, there is still room in the market for growth,” Happ added. “With equity levels at record highs and interest rates broadly expected to tick upward in coming years, cash-out lending is likely to play a much larger part in the overall refinance market."