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Recent home price increases, up more than 40% from pre-pandemic levels, are staggering, and current homeowners should be scrambling to refinance. But for most people, with interest rates more than double what they were two years ago, the cost of withdrawing cash is simply too high.
Applications for home refinancing fell last week for the fourth straight week, down 2%, according to the Mortgage Bankers Association’s Seasonally Adjusted Index. Last week’s results included adjustments for the Fourth of July holiday. Demand remains 28% higher than the same week a year ago, when interest rates were 7 basis points higher.
Homeowners held a total of $17 trillion in equity as of the end of the first quarter of 2024, according to CoreLogic. In just one year, homeowners gained $1.5 trillion, or $28,000 per borrower.
“Despite significant home equity gains in recent years, most borrowers have little incentive to refinance at current rates,” MBA economist Joel Kan said in a release.
30-Year Fixed Rate Average Contract Rate Mortgage Qualifying loan balances ($766,550 or less) fell to 7.00% from 7.03% last week, and points for loans with 20% down fell from 0.62 (including origination fee) to 0.60.
Mortgage applications for home purchases increased 1% this week, but were down 13% from the same week a year ago.
“Purchasing activity has picked up slightly, primarily due to an increase in FHA and VA filings,” Kan added.
There have been no changes in mortgage rates so far this week, despite the Fed chairman saying Jerome PowellTestify before Congress on Tuesday. That could change with the latest economic data released on Thursday, along with the latest data on the consumer price index.
“Fed Chairman Powell reiterated the same message that multiple Fed spokespeople have delivered,” wrote Matthew Graham, chief operating officer of Mortgage News Daily. “After the Consumer Price Index (CPI) was released, for better or worse, Changes (in interest rates) are almost inevitable.”
