About 22% of homeowners who refinanced their first-lien mortgage during the last quarter put in cash to lower principal, tying a record for the third highest “cash-in” share since Freddie Mac started keeping records in 1985.

Many borrowers today must pay down principal to lower their loan-to-value ratio in order to qualify to refinance their mortgage, either because their Ann Arbor homes have declined in value,  or because of tighter lending standards. A growing number are willing to do it because mortgage rates are at 50-year lows, at the same time that relatively safe, cash investments such as certificates of deposit, savings accounts and money-market funds are paying very low interest, “which makes the choice of paying down mortgage principal very attractive to borrowers with extra cash reserves,” says Frank Nothaft, Freddie Mac’s vice president and chief economist.

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Mortgage Rates Hit Record Lows »Just as Americans were getting ready for the Thanksgiving holiday, mortgage rates fell again, reaching record lows in Bankrate.com’s weekly national survey and dropping to the lowest level in Zillow’s Mortgage Rate Monitor since its inception 18 months ago.

The average conforming 30-year fixed mortgage rate fell to 5.00 percent, according to Bankrate.com. The average 30-year fixed mortgage has an average of 0.44 discount and origination points.  On Zillow, the weekly average rate borrowers were quoted  for 30-year fixed mortgages decreased six basis points last week to 4.69 percent, down from 4.75 percent the week prior

Rates for 15-year fixed mortgages fell two basis points to 4.23 percent from 4.25 percent, and 5-1 adjustable rate mortgages increased one basis point to 3.69 percent, from 3.68 percent the week prior on the Zillow monitor.  Bankrate had the average 15-year fixed mortgage down to 4.47 percent while the larger jumbo 30-year fixed rate rose to 6.03 percent. Adjustable rate mortgages decreased slightly this week, with the average 1-year ARM inching down to 5.37 percent and the 5-year ARM slipping to 4.54 percent.

Bankrate reported rates are significantly lower than one year ago. This time last year, the average 30-year fixed mortgage rate was 5.92 percent, meaning a $200,000 loan would have carried a monthly payment of $1,188.83. With the average rate now 5.00 percent, the monthly payment for the same size loan would be $1,073.64, a savings of $115 per month for a homeowner refinancing now.

Zillow found that the volume of mortgage requests last week fell 4.4 percent from the prior week. Of last week’s requests, 49 percent were for refinance loans, 49 percent were for purchase loans and 2 percent were for home equity loans. The prior week, 47 percent of requests were for refinance loans, 51 percent were for purchase loans and 2 percent were for home equity loans.

Thirty-year fixed mortgage rates varied by state in Zillow’s survey. Minnesota mortgage rates, Arizona mortgage rates, Michigan mortgage rates and Georgia mortgage rates decreased the most, from 4.76 percent to 4.64 percent in Minnesota, from 4.85 percent to 4.75 percent in Arizona, from 4.81 percent to 4.71 percent in Michigan and from 4.83 percent to 4.73 percent in Georgia. New York mortgage rates (4.83 percent) and Tennessee mortgage rates (4.80 percent) were the highest in the country, while Texas mortgage rates (4.62 percent), and Minnesota mortgage rates (4.64 percent) were the lowest.

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