Erosion of home equity, stricter lending criteria, higher fees, and declining incomes have prevented many mortgage borrowers from refinancing.

About 37 percent of borrowers with 30-year conforming fixed loans have rates of 6 percent or higher, but data from the Mortgage Bankers Association and other organizations shows muted refi activity for current rates at near-historic lows of about 5 percent.

Refi activity has been limited to borrowers who need it the least; savings have largely gone to very, very good credit borrowers and it really isn't going very far down the credit spectrum, says MBA's Michael Fratantoni.

Source: Wall Street Journal Nick Timiraos