Mortgage Refi Opportunities Squandered In America

Interest rates have been busy hitting life-time lows, but the irony is that fewer and fewer Americans are able to take advantage of this situation.  The most recent report from the Mortgage Bankers Association shows that mortgage applications fell almost 5%.  If you break these down, the applications for new mortgages were flat but the refinance applications were down more than 6%.

There is a simple answer here.  Americans cannot afford to try to save money.  Literally.  This was the second week in a row with a drop in refinance applications.  If mortgages are not at all-time lows, they might as well be.  At a minimum, the lower and lower rates should be boosting refinance activity.  Maybe it is that all who can refinance have already gone through the process.

Imagine having a 30-year mortgage rate at 4.25%.  It is like they are giving the rate away.  Still, the mortgage hassle these days and the qualification standards are not exactly easy by any standards.  It also seems as though the private lenders are not lowering rates.  How would you like to loan someone money for a house at 4.25% knowing that if they default you will go up to a year or longer without a payment and without being able to boot the deadbeats out?

Another issue working against the borrowers is that their houses are now underwater even more than they were last year.  While many people overpaid for a house or while they took out too much mortgage that led to the foreclosure waves, it is hard to tell someone that they are at fault because their house has fallen 20% or 30%.

The sad thing is that most might not qualify for a house any longer, but they can borrow money to buy and hold gold.  Go figure.  It is a strange new world out there in the world of finance.  It is getting stranger every day.

JON C. OGG