The average rate on an outstanding mortgage was 5.979 percent in this year's first quarter, according to the Bureau of Economic Analysis. With the rate on the 30-year fixed lingering at around 4.75 percent all July, it would seem most homeowners could benefit from a refinance.
But people are keeping their higher-rate loans. A lot of folks want to refi, and have tried to refi, but don't qualify because they have little or no equity. When their homes dropped in value during the housing crash, they lost their ability to refinance. They can't borrow more than the house is worth.
"It's not really rate that's driving people into not being able to refinance and lower their overall mortgage costs," says Cameron Findlay, chief economist for LendingTree.com. "A lot of people are being disqualified ... because their home has depreciated so much."
The federal Home Affordable Refinance Program has been a bust. It was designed to help homeowners refi, even if they owe more than the house is worth. The Obama administration predicted 2 million people would get HARP refis in 16 months.
Instead, 292,000 got HARP refis in the program's first 11 months. So, the program was extended.