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Despite Low Rates, Homeowners Hesitate to Refinance, WSJ

Borrowers Miss Out on Billions in Savings

The Federal Reserve has pushed mortgage rates to near half-century lows, but millions of U.S. homeowners haven't benefited from that because they can't—or won't—refinance.Falling home prices have left many owners with little or no equity, making it harder to qualify for refinancing. Moreover, stricter lending standards and higher fees by banks and mortgage giants Fannie Mae and Freddie Mac and declining incomes have made it tougher and less attractive for borrowers to seek new loans.Around 37% of all borrowers with 30-year conforming fixed-rate mortgages - who collectively hold about $1.2 trillion of home loans—have mortgage rates of 6% or higher,according to investment bank Credit Suisse. Many could reduce their rates by a full percentage point if they refinanced at current rates,about 5%.More than half could lower their rates nearly three-quarters of a percentage point, according to Credit Suisse.But new refinance applications in January stood near their lowest levels in the past year.
By Nick Timiraos, Mar. 2, 2010 WSJ

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