Despite having $17 trillion in equity, homeowners continue to see a decline in mortgage refinance demand.

• The number of applications to refinance a home decreased by 2% for the fourth consecutive week.
• As of the end of the first quarter of 2024, homeowners collectively held $17 trillion in equity.
• Last week, the average interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 7.00% from 7.03%.

Home prices have increased by more than 40% since the pandemic, prompting many homeowners to consider refinancing. However, with interest rates now more than twice what they were two years ago, most homeowners are unable to afford to pull out cash from their homes.

The Mortgage Bankers Association's seasonally adjusted index shows that applications to refinance a home decreased by 2% last week, marking the fourth consecutive week of decline. Despite this, demand remains 28% higher than it was during the same week a year ago, when interest rates were 7 basis points higher.

At the conclusion of the first quarter in 2024, homeowners collectively held $17 trillion in equity, according to CoreLogic. In a single year, homeowners experienced a gain of $1.5 trillion, which equated to $28,000 per borrower.

Despite substantial growth in home equity gains, most borrowers lack motivation to refinance at present interest rates, according to Joel Kan, an MBA economist, in a statement.

The interest rate for 30-year fixed-rate mortgages with conforming loan balances 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.

The number of mortgage applications for purchasing a home rose by 1% in the current week, but was 13% lower compared to the corresponding week in the previous year.

FHA and VA applications led to a slight increase in purchase activity, according to Kan.

Despite Federal Reserve Chair Jerome Powell's testimony before Congress on Tuesday, mortgage rates have remained unchanged this week. This is likely to change with the release of new economic data on Thursday, including the latest Consumer Price Index reading.

"Fed Chair Powell echoed the same messages conveyed by various Fed speakers, according to Matthew Graham, COO of Mortgage News Daily. Following the release of CPI, rate movement is almost certain to occur, regardless of the outcome."