Applications for home equity loan refinancing have reached a 15 year high. According to Freddie Mac, "88% of homeowners who refinance their homes in the 1st quarter got a mortgage at least 5% larger than their first loan." This was the highest loan application increase since 1990.

Interest rates are going up, so you would think that people who be taking out loans at a slower pace. To some degree that is true, because anyone who locked a 30 year fixed under 6% is most likely not going to refinance. They are likely however to take out a home equity loan for cash out or for debt consolidation. Al Perida, a broker from Bridge Capital, said, "People continue to run up credit card bills, and consolidating their debt with a second mortgage will save them thousands of dollars in interest." Perida continued, "tax deductions and lower payments are 2 reasons people will continue to take out loans in 2006."

The market is trending away from refinancing first mortgages, and moving towards a home equity loan market. Homeowners will be refinancing this year, only they will be refinancing their adjustable rate second mortgages, rather than their conventional mortgage in first position. If you purchase a home recently with an 80-20 combination, you may want to consider refinancing the adjustable rate credit. The rate is variable and refinancing with a fixed rate equity loan will save you money.