According to Freddie Mac, half of the homeowners who refinanced their mortgages in the second quarter witnessed their interest rate dip by about 20 percent, saving them approximately $3.4 billion during the next year.

The new interest rate in the second quarter was down by roughly 1.25 percent from the previous rate.

Frank Nothaft, president and chief economist of the Freddie Mac said that borrowers who refinanced their mortgage would enjoy lower monthly payment. They would save $160 per month on a loan of $200,000.

Mortgage rates are up slightly from the lows in April. At present, the average 30-year rate stands at 5.25 percent, up from 5.2 percent.

Frank Nothaft anticipates more than half of the mortgages would be refinanced during the remaining year, providing the rates continue to hang about their current levels of
5.25 percent.

Overall, cash out volumes are down by 35 percent from the previous year.

Amy Crews Cutts, Freddie Mac deputy chief economist, said, "Credit standards are quite strict today for cash-out refis, and borrowers need a significant equity cushion to contemplate equity extraction."