Despite historically low mortgage rates, homeowners are having a hard time refinancing their loans, according to Federal Reserve Board staff.
In briefing members of the Federal Reserve's monetary policy committee, Fed staffers noted that record-low mortgage rates "supported a relatively high level of refinancing activity" in August and September, "but many borrowers reportedly remained unable to refinance because of insufficient home equity or poor credit histories."
The information was released Tuesday afternoon along with minutes of the September 21 Federal Open Market Committee meeting.
During the summer, Federal Reserve Board chairman Ben Bernanke commented several times that mortgage underwriting standards are tight.
FOMC members noted that residential construction and home sales remain "very weak" in their discussion of the housing market. "Despite efforts aimed at mitigation, foreclosures continued to add to the elevated supply of available homes, putting downward pressure on home prices and housing construction."
The minutes also reveal that between the August 10 and Sept. 21 FOMC meetings, the Federal Reserve purchased $28 billion in 2-year to 10-year Treasury securities to offset the runoff from its portfolio of agency debt and mortgage-backed securities.
The FOMC members considered increasing the Fed's purchases of Treasury securities to boost economic growth, but delayed a decision until their Nov. 2 meeting.
