Many borrowers can’t refinance because they don’t have enough equity, their credit isn’t strong enough, or they’re income has fallen in recent years. Others may qualify but face extra fees that make refinancing too expensive to justify.

More evidence is out on Wednesday that the pool of homeowners who can refinance under today’s more stringent lending standards has been exhausted: Mortgage rates have hovered close to their lowest levels in decades, and yet refinance demand fell last week from the previous week. Demand for home-purchase mortgages also continued to fall last week, according to the weekly application survey from the Mortgage Bankers Association. That means there have now been five straight weeks of declining demand for purchase mortgages, which have fallen to their lowest level since February 1997. “Home buyers have not yet returned to the market following the expiration of the home-buyer tax credit at the end of April,” said Michael Fratantoni, the MBA’s vice president of research and economics.
By Nick Timiraos, June 9,2010 WSJ

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