From Kenneth Harney in the LA Times: ‘Cash-in’ refis growing in popularity In Freddie Mac’s latest quarterly survey of refinancings, 33% of homeowners put cash into the deal to lower their mortgage balances, the highest percentage ever. By contrast, only 27% of refinancers took cash out — the lowest percentage on record. … there has been a steady rise since the fourth quarter of 2007, when cash-ins hit 9%, up from just 5% of all refis earlier that year. By early 2009, they accounted for 13% of refinancings, then grew to 18% in the third quarter. After that, cash-ins jumped to 33% in the final three months of 2009. Harney discusses two reasons for “cash-in” refis: 1) Paying down the mortgage can get the borrower a better loan and avoid PMI, and 2) with interest rates so low on money market funds and CDs, paying down the mortgage offers a higher return. This “cash-in” has shown up in the Fed’s Flow of Funds data. Click on graph for larger image in new window. This graph shows the net equity extraction, or mortgage equity withdrawal (MEW), results, using the Flow of Funds (and BEA data) compared to the Kennedy-Greenspan method.

Read more here – Harney: "Cash-in" Refis