Fannie Mae Official: Homeowners Who Don't Refinance 'Leaving Money on the Table'

Thursday, 13 Feb 2014 09:12 AM

By Dan Weil

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While the 30-year fixed mortgage rate fell to 4.23 percent for the week ended Feb. 6, according to Freddie Mac, the lowest since November, refinancing activity remains subdued, says Steve Deggendorf, a director in Fannie Mae's economic and strategic research group.

"A lot of consumers are leaving money on the table," he tells Yahoo.

Fannie Mae estimates that 40 to 50 percent of Americans with mortgages have never refinanced and have an average mortgage rate around 6 percent, the news service reports. About 53 million American households have a mortgage, Zillow estimates.

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Fannie Mae's national housing survey cites several reasons why people don't refinance, Yahoo reports.
  • Refinancing doesn't cut payments enough.
  • Closing costs are excessive.
  • Homeowners don't want to extend the maturity of their loan.
  • Homeowners don't trust their lender.
  • Homeowners are underwater on their mortgage or have other issues that would prevent them from refinancing.
All of those are understandable worries, but most can be overcome, Deggendorf says. For example, homeowners can refinance with zero or very low closing costs, and the costs can be made part of the loan instead.

Mortgage rates have dropped in synch with Treasury yields amid concern about the global economy and stock markets.

"Much to the benefit of mortgage shoppers, this move [to bonds] is dragging down yields and mortgage rates," Keith Gumbinger of HSH.com, a mortgage information company, tells CNNMoney.

"This is a nice surprise" for people seeking to buy a home or refinance their mortgage, he notes.

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