Dec. 8, 2005 - HOUSE OR PIGGY BANK?

The increase in mortgage interest rates during the third quarter did not deter
homeowners from refinancing to pull cash from their homes. Borrowers took
$60.4 billion out of their homes through cash-out refinancings during the
quarter, according to mortgage finance giant Freddie Mac; and they pulled
out as much from their homes during the second quarter as well. "These
numbers are unreal," says David Rosenberg, an economist with Merrill Lynch,
noting that they come at a time when home price increases are slowing.
Economists say the numbers suggest either that homeowners must believe
the housing market is still healthy or they are desperate for cash and want to
maintain their lifestyle. It could also mean investors have returned to the
"borrow and spend" mindset of the past decade.

Source: U.S. News & World Report (11/21/05); Lim, Paul J.
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