Do Low Mortgage Balances Limit Refinancing Opportunities?

Many homeowners miss significant savings by not refinancing when interest rates are low. Among those who may find refinancing difficult are borrowers with balances below $150,000. Low-balance mortgagors pay proportionally more closing costs, are offered higher interest rates, and may find fewer willing mortgage lenders and brokers. Consistent with these limited opportunities, low-balance mortgagors prepaid their loans less frequently during two high-refinance periods, 2020 and 2012-2019, than comparable high-balance mortgagors. Because low-income borrowers tend to have low-balance mortgages, the benefits of refinancing may be least available to the homeowners most in need of financial relief