Freddie Mac: Less homeowners tap equity

Tag : Home Based

The amount of money Americans pulled out of their homes is at afour-year low as homeowners battle falling home values and stricterstandards among lenders, Freddie Mac said Thursday.
Homeowners "cashed out" about $68 billion in home equity during thefirst half of the year, the lowest since the first six months of2004, according to the McLean, Va.-based mortgage finance company.
About $38 billion in home equity was cashed out through refinancingof loans made to prime borrowers in the second quarter - less thanhalf the $79 billion cashed out during the same period last year,said Amy Crews Cutts, Freddie Mac deputy chief economist.
In the second quarter, 66 percent of homeowners who refinancedloans purchased by Freddie Mac "cashed out" at least 5 percent oftheir equity.
Tapping home equity allows homeowners to get cash out of theirhomes. And economists watch that number closely because it affectsconsumer spending and investment decisions.
Consumer spending, which accounts for two-thirds of total economicactivity, remains under severe strains, as the housing marketdownturn, combined with rising food and gasoline costs, have hurtconsumer confidence.