NEW YORK (CNNMoney.com) -- The percentage of homeowners who refinanced with a Freddie Mac-owned loan in the first quarter of 2008 and received mortgages with loan amounts higher than their original mortgages, fell to the lowest levels since early 2004.
Because credit has become more difficult to get, the quality of borrowers qualifying for cash-out refinance loans has significantly increased, said Mark Zandi, chief economist for Moody's Economy.com.
"Lenders are only refinancing those with 50% equity or more," he said. "There are a lot of home owners out there who don't have any debt besides their mortgage."
Zandi said many of these prime borrowers decided to refinance as interest rates have sharply declined. Freddie Mac expects 30-year fixed mortgage rates to average between 5.8% and 6.0% for prime loans over 2008. 
