by Calculated Risk on 2/13/2010 10:16:00 PM

From Dina ElBoghdady and Renae Merle at the WaPo: Refinancing unavailable for many borrowers

The refinancing wave that swept the nation when mortgage rates hit historic lows last year is petering out, leaving behind millions of homeowners who could not qualify for the best rates.

Half of the nation's borrowers have mortgages with rates above 6 percent even though the average rate on 30-year, fixed rate mortgages has been about 5 percent for most of the past year, according to research firm First American CoreLogic.

Many of these homeowners have been unable to refinance because they have little or no equity in their homes (many have negative equity), some have lost their jobs and can't qualify, and others have been rejected because lenders have tightened standards.

The following graph shows the MBA seasonally adjusted Refinance index since 1990.

Click on graph for larger image in new window.

As the article mentions, there was a huge wave of refinance activity in 2003 when mortgage rates fell below 6%, and house prices increased sharply.

There was another refinance boom starting at the end of 2008 and through the first half of 2009 when mortgage rates fell below 5%.

Now, even with rates near 5%, it appears the recent refinance boom is mostly over. Those that can refinance already have - and those that can't are out of luck.