Cash-out refis growth “another surprise”
TransUnion’s quarterly report also showed further evidence of a shift from refinance to purchase as the mortgage market cooled down in the last quarter of 2021.
Mellman, however, expressed surprise that in a rising rate environment, cash-out refi had performed strongly, growing by 14% during the same period, reflecting homeowners’ increase in home equity.
This was all the more significant as rate and term refis had dropped by a hefty 42% year over year following the rise in interest rates.
“That’s a clear sign that consumers want to tap into home equity. It also points to real opportunity in the home equity loan and home equity line of credit space. Home price appreciation is a challenge to first time homebuyers, but cash-out refi is a huge boon to existing homeowners,” Mellman said.