About 82% of homeowners who refinanced in the third quarter either decreased or maintained their principal balance, up from 77% in the previous quarter according to Freddie Mac. Cash-out borrowers, those who increased their balance by at least 5%, made up 18% of all refinancings in the third quarter, a significant decline from the average of 46% between 1985 and 2010. Cash-out — or home equity converted to cash — levels also hit a 16-year low at $5.3 billion, down from $6.3 billion in the second quarter and from the peak of $83.7 billion in the second quarter 2006. "Savvy homeowners are taking advantage of some of the lowest fixed-rates in more than 60 years to lock in interest savings," said Frank Nothaft, Freddie Mac vice president and chief economist. The median interest-rate reduction was about 1.2 percentage points for a 30-year fixed-rate mortgage. Over the first year of the refinance loan life, these borrowers will save about $2,500 in interest payments on a $200,000 loan, Nothaft said. Those who refinanced in the third quarter lost less on their home value in the past five years than the average U.S. home. Refinancers saw median home values dip about 7%, while the national average declined about 25% since September 2006, according to the Freddie Mac Home Price Index. Estimates come from a sample of properties on which Freddie Mac has funded two successive conventional, first-mortgage loans, and the latest loan is for a refinance. The analysis does not track the use of funds made available from the refinances. Write to Andrew Scoggin. Follow him on Twitter @ascoggin.