"Cash-out" refinances hit a 26-year low in the fourth quarter at Freddie Mac, as more homeowners looked to maintain or lower their mortgage balance.

The mortgage giant said Thursday 85% of borrowers refinanced with the same or lower loan balance, a bump up from 82% in the third quarter. That breaks down to 37% who maintained their balance and 49% who lowered it by paying additional money at closing.

Cash-out refinances, or balances increased by at least 5%, made up just 15% in the fourth quarter, a sharp drop from the average of 46% between 1985 and 2010.

The average borrower reduced their interest by 1.4 percentage points, translating to $2,700 in interest savings over a year on a $200,000 loan. Fixed-rate mortgages hit a then-all-time low in December, with the 30-year FRM averaging 3.96%.

These loans, however, come from houses relatively less affected by declining home values. Of refinanced mortgages, the median value of the home dropped 4% over the median previous loan life of about four years.

Freddie Mac's price index, for comparison, fell 23% between September 2007 and September 2011.

For all of 2011, refinances that maintained or lowered balances increased to 80% from 79% a year earlier.