Screws are tightening on the cash-out refinancing market.

The share of certain cash-out refinancing home owners is shrinking and that's likely because the homes backing those loans aren't appreciating as fast as they once did.

What's more slower and less appreciation is forcing home owners to hold onto their homes much longer before they can tap the equity till.

That's according to the numbers in Freddie Mac's fourth quarter 2006 "Cash-Out Refinance Report".

The report says 84 percent of Freddie Mac-owned loans were refinanced into new cash-out mortgages with loan amounts that were at least five percent higher than the original mortgage balances.

That percentage is down from the third quarter's 87 percent, down from the second quarter's record 88 percent and even down the first quarter's 86 percent.

As the housing boom surged, that percentage had risen steadily virtually every quarter since the fourth quarter of 2004 when only 57 percent of Freddie Mac's loans were refinanced with new, larger cash-out mortgages.

The number began to slip, with the rest of the housing market, after the 88 percent peak in the second quarter last year.

The average appreciation rate of homes refinanced with those cash-out loans followed in lock step. Again, during the fourth quarter of 2004, the rate of appreciation on the cash-out loans was 16 percent and rising. It peaked at 34 percent, again, during the second quarter of 2006 and slipped down to 28 percent during the fourth quarter of 2006.

Tracking the same trend, as equity got harder to come by, home owners were holding out longer before refinancing.

In the fourth quarter 2004 cash-out refinancing occurred on average after holding the previous loan 2.2 years. By the fourth quarter of 2006 the wait was up to 3.4 years.

Cash-out refinancing home owners tracked by Freddie Mac haven't kept their previous loans that long since the second quarter of 2002.

The fourth quarter also revealed a year-end rush to catch falling rates.

Among all loans tracked by Freddie Mac, the refinanced share was 46 percent in the fourth quarter 2006, up from 41 percent in the third quarter.

Freddie Mac said the average 30-year fixed mortgage rate of 6.2 percent was four-tenths of a percent lower than the rate in the third quarter.

Also in the fourth quarter, the median ratio of new-to-old interest rate was 1.06, which means one-half of those borrowers who paid off their original loan, took out a new one that increased their mortgage coupon rate by 6 percent, or roughly three-eighths of a percentage point.

"With interest rates averaging 6.2 percent in the fourth quarter for 30-year fixed-rate mortgages, many families found it cost effective to cash-out equity through a new first mortgage even though it raised their rate. With the prime rate at 8.25 percent, a home equity loan or line of credit based on that rate may not make sense if the financing need is large, like a major home improvement or college tuition payments, and will be paid back over several years," said Amy Crews Cutts, Freddie Mac's deputy chief economist.

Even if the fourth quarter refinanced rates were higher than the old loan, the median ratio was a better deal during the second quarter when it was in the second quarter when it averaged 1.08, and during the third quarter when it was 1.10.

"Falling mortgage rates encouraged some people to refinance to lower their payments, for example if they had an adjustable-rate mortgage that was scheduled to reset soon, but the primary driver of refinance continues to be equity extraction," said Frank Nothaft, Freddie Mac's vice president and chief economist.

Word is, get it while you can.

Freddie Mac expects 30-fixed mortgage rates to average between 6.3 and 6.5 percent over 2007 and initial rates on 1-year Treasury-indexed ARMs to hover near 5.5 percent.

Those rates remain relatively low but slower rates of appreciation means it'll take longer to gain equity and cost a tad more to tap it.

In another downward trend, home owners cashed out $70.7 billion during the fourth quarter of 2006 compared to $80.2 billion during the third quarter.

Freddie Mac expects cash-out volume to decline further during 2007.