Mortgage Refinancing at All Time Low, Despite Rock Bottom Rates

Today, every person you speak with, and every news article you read, will suggest that Americans are worried about their finances. In the current economy, as more and more Americans are facing unemployment, the depreciation of home values can be almost too much to bear. Yet, in all this tragedy, there is a silver lining.

Mortgage rates have dropped again, to the lowest levels most homeowners will have seen in their lifetimes. With such low rates, and so many Americans concerned about saving money, refinancing should be common.

Instead, refinancing activity has been exceptionally slow. In fact, the current rate of refinancing applications is only a third of what it was in 2003.

Experts believe the lackluster refinancing rate is due chiefly to homeowner concerns that their debt is a prohibitive factor. High amounts of debt leave many Americans thinking they would never qualify to refinance their mortgage, even though a good number of people at the moment are paying down debts and making efforts to improve their credit rating.

Americans Lack Home Equity

The biggest problem, however, is a lack of home equity. Dropping property values have left many homeowners with little or no home equity. While many Americans have credit scores worthy of excellent mortgage rates, they lack the equity and guarantee of future income that is necessary for a good loan.

Instead of attracting new applicants in need of a lower mortgage rate, the majority of mortgage refinancing applicants at the moment are actually those who have already refinanced at some point in the last couple years. However, those with higher rates, who could not afford to refinance during the last drop in 2009, in many cases still cannot refinance, usually because the value of their property has dropped or they have an uncertain employment situation.