Many homeowners can't get approved for refinancing because their homes have lost too much value.
A sign announces a pending residential home sale in Wayland, Mass., Wednesday, Aug. 10, 2011. Fixed mortgage rates fell to at or near record lows Thursday, Aug. 11, 2011. That's good news for the few who can afford to buy a home or are able to refinance. But the rates have done little to lift the ailing housing market.
Mortgage interest rates fell to the lowest levels on record this week, though falling home values mean many homeowners don't have enough equity to qualify to refinance their loans.
Freddie Mac said that the 30-year fixed mortgage averaged 4.15 percent, breaking a previous low of 4.17 percent set in November 2010, according to its weekly national survey. Rates on a 15-year mortgage fell to 3.36 percent, down from 3.9 a year ago.
Mortgage rates have fallen in recent weeks in response to turmoil on Wall Street as investors seek the safe haven of long-term Treasury bonds. Low rates alone, however, haven't been enough to stimulate a refinance boom -- a possible boon to those who are struggling with mortgage payments they can't afford -- because many homeowners can't qualify for new loans.
Kris Wilson, a senior loan officer with Fairway Independent Mortgage, said that about four of every five loan applications she handles are now for purchases, though there are more of those. On Thursday, she helped a borrower lock in a 30-year fixed-rate mortgage at 3.75 percent.
"We're busy," Wilson said. "I think everyone is."
Wilson said that despite the increasing number of underwater homeowners, there are creative ways to put together deals. One borrower used a loan from his 401(k) to help pay off a second mortgage that enabled him to refinance even though he owed more than the house was worth.
The Mortgage Bankers said that overall application activity was up slightly and that the refinance share of mortgage applications increased to 78.8 percent, up slightly from the previous week. It was the highest refinance share since November 2010. Applications for adjustable-rate mortgages continue to fall as borrowers favor fixed-rate mortgages.
Alex Stenback, Mortgage Banker with the Residential Mortgage Group, said many prospective borrowers don't get as far as an appraisal on their property to determine if refinancing is possible, but he said that word is spreading slowly and application volume is increasing.
Because of increases in originations, the Mortgage Bankers have increased their expectations for volume activity this year to more than $1 trillion, but have reduced their origination forecast for 2012 to $931 billion.
Jim Buchta • 612-673-7376