Even Record Low Mortgage Rates Fail to Cheer Homeowners

October 08 00:00 2011

New York, October 8 (RainbowNewsLine.com) – The average mortgage rate of a 30-year fixed rate mortgage fell to 3.94 percent Thursday, registering the lowest rate since the government-backed lender Freddie Mac started tracking rates in 1971. However, this fall did not cheer thousands of homeowners who cannot qualify for refinancing because their homes are worth less than they were. Those who can take advantage of the low rates will be able to save hundreds of dollars every month.

Falling home values and conservative appraising have made it difficult for home owners whose mortgage rates are around 6, 7, or 8 percent and who are most in need of refinancing to refinance their loans. They cannot qualify because they are not left with enough equity in their homes.

Thomas Callahan, executive director of the Massachusetts Affordable Housing Alliance said that “They’re doing fine, they’re paying their mortgages, and they’d normally be candidates to refinance at these lower rates,” and added that “But given the negative equity situation, it’s restricting many of them from refinancing.”

The number of mortgages refinanced every month in Plymouth County is falling in spite of the improvement in mortgage rates, as is evident from real estate data from the last three years. Even the downgrading of credit scores disqualifies homeowners for refinancing. Experts, however, say that falling home prices are mostly to blame.