Thianchai Sitthikongsak | Moment | Getty Images The recent run-up in home prices, a staggering increase of more than 40% from pre-pandemic levels, should have current homeowners rushing to refinance. But for most, pulling that cash out simply costs too much now that interest rates are more than twice what they were just two years ago. Applications to refinance a home dropped last week for the fourth straight week, down 2%, according to the Mortgage Bankers Association's seasonally adjusted index.
Last week's results included an adjustment for the July Fourth holiday. Demand is still 28% higher than it was the same week one year ago, when rates were 7 basis points higher. Homeowners were sitting on a collective $17 trillion in equity at 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. "Although home equity gains have been significant in recent years, most borrowers do not have much of an incentive to refinance at current rates," said Joel Kan, an MBA economist, in a release.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased last week to 7.00% from 7.03%, with points falling to 0.
60 from 0.62 (including the origination fee) for loans with a 20% down payment. Applications for a mortgage to purchase a home increased 1% for the week but were 13% lower than the same week one year ago.
"Purchase activity picked up sligh.