Mortgage refinance demand drops further, despite homeowners sitting on $17 trillion in equity

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 decreasing 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 slightly, driven primarily by increases in FHA and VA applications,” Kan added.

Mortgage rates haven’t moved at all so far this week, despite Federal Reserve Chair Jerome Powell‘s testimony before Congress on Tuesday. That is likely to change with new economic data coming Thursday with the latest read on the Consumer Price Index.

“Fed Chair Powell reiterated the same messages heard from multiple Fed speakers,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “After CPI comes out, [rate] movement is all but guaranteed, for better or worse.”