Home buyers wouldn't be the only ones to feel the pain, of course. Large corporations have been in the process of issuing and refinancing debt as they take advantage of the recent extremely low interest environment. That boost to their balance sheets will diminish as rates rise.

The competition for capital in 2010 will effect the entire economy, but the mortgage market could well feel it first.

The low mortgage rates available today are a hot topic in mainstream media. It should not be difficult to find articles and research papers on mortgage rates or the mortgage market in general. If you are having trouble finding needs doing a few quick long Google searches should help you find the information you need.

Most of the companies that offer low mortgage rates are advertising very hard in the current economic crisis. Some of these companies have taken a very hard on their balance sheet and they need to find a way to make profit. The best way to make a profit is to gain more customers. If they can gain more customers it makes their balance sheet look better which also increases their chances of gaining new investors.

Wells Fargo and many other mortgage lenders are willing to do what it takes to get you as a new customer. These companies want to gain new customers and want to increase their services not only in the home loan division but in the personal banking division as well. If you have a home loan with this company and is much easier to get a personal banking relationship with them as well and they know this.

Please make sure to return to Subprime Blogger for all your mortgage and financial news. To stay up to date on the current state of finances make sure to bookmark the current news category below.

That was up from a flat 5% a week earlier and from an all-time low of 4.87% in the week that ended Oct. 8. The surveys assumed that borrowers with good credit were making a down payment of at least 20%. Borrowers this month have paid on average 0.7% of the loan amount in upfront charges.

Rates on shorter-term fixed-rate mortgages and adjustable-rate loans also rose. For 15-year fixed-rate loans, often used by borrowers seeking to pay off their mortgages faster, the rate this week averaged 4.46% with 0.6% of the balance paid in lender fees and points, up from 4.43% with similar upfront costs last week.

For the full year, 30-year fixed rates have averaged just below 5% thanks to intervention by the government, triggering a refinancing boom. Seven of every 10 mortgages this year have been refinancings.

The Mortgage Banker’s Association said this week mortgage applications declined over 16 percent as 30 year fixed mortgage rates crept up closer to 5 percent at par. Mortgage refinancing is down significantly in quarter 3 of this year as the extended period of low interest rates has allowed most who qualify to refinance by now. Mortgage purchase applications have steadily increased throughout the year.

The Obama administration said Thursday that 500,000 homeowners have had their loans modified under its mortgage relief plan, reaching a goal set over the summer.

The government has also launched a new effort to streamline the application process and simplified income and documentation requirements. And top administration officials were meeting Thursday with executives at large mortgage servicing companies to discuss their progress under the program.

"We've put significant pressure on servicers to ramp up their efforts," said Housing Secretary Shaun Donovan. "We're holding them to higher performance standards."

However, many housing advocates have been disappointed with the plan's progress and say that getting a loan modification is still a battle. Most lenders, they say, are still unwilling to reduce the borrowers' principal balance, a key concern in areas like California where prices have dropped dramatically.

"It's not working fast enough and it's not working broadly enough,' said Kevin Stein, associate director of the California Reinvestment Coalition, based in San Francisco. "There are no obvious consequences to the servicers for not doing what they're supposed to be doing."

The proposed new disclosures will be required at the point of application. This is a great idea, if it is properly implemented. Proper implementation means that the information lenders must submit at the point of application will help consumers select from among loan providers. Stated somewhat differently, the information must reveal differences between lenders that will cause borrowers to prefer one over another.

The closely watched Standard & Poor's/Case-Shiller index shows that prices of previously owned single-family homes in this area rose 2.85 percent in June compared with the previous month. The monthly gain is the second in a row in the region, topping the 1.3 percent increase in May. It is the largest jump since May 2006, when prices peaked.

Even so, prices remain much lower than they were at the same time last year, locally and nationally. But the reports, which track repeat sales of a home, bolster more recent positive trends reflected in other national housing market indicators. Home sales, construction activity and builder confidence have all risen in the past few months.

"It's noteworthy that all indicators are pointing in the same direction," said Mike Larson, a housing analyst at Weiss Research. "But it's not 'Happy days are here again.' We're going to see continued deterioration, but at a slower pace."

Nationally, prices rose 2.9 percent in the second quarter from the previous quarter -- the first such gain in more than two years, according to the S&P/Case-Shiller report, which measured prices in all nine U.S. census divisions. If seasonally adjusted, they were up 1.4 percent.

The report also broke out numbers for the nation's major metropolitan areas, including a 20-city index. That index showed that prices rose 1.4 percent from May to June. If seasonally adjusted, they rose 0.7 percent, with prices up in every region except five. The steepest drop was in Las Vegas.

The federal index showed a slightly more modest 0.5 percent seasonally adjusted month-to-month gain in June after a revised increase of 0.6 percent in May. It also concluded that prices rose in five of the nine U.S. census divisions from May to June. But unlike the S&P/Case-Shiller index, it showed a price drop from the first to second quarters -- 0.7 percent.

The difference may be related to the fact that each index measures a different universe of home purchases. The federal index reflects sales of homes financed by mortgages that meet the guidelines of the mortgage financiers Fannie Mae and Freddie Mac. The S&P/Case-Shiller index captures all types of home sales, including those financed by subprime or government-backed loans. Both indexes show that pricing improved in recent months and it could be that the S&P/Case Shiller index reflected more recent sales transactions, which could explain why their sales are up quarter over quarter.

Housing experts are more interested in the monthly numbers anyway. They are looking for signs of a turnaround, and comparisons to previous quarters or previous years are not as helpful to them on that front.

Nationally, second quarter prices fell nearly 15 percent from the same period a year ago, according to the Case-Shiller numbers. The federal index shows them falling 6.1 percent in the first half of the year, compared with a year ago.

"The year-over-year numbers obscure what's really happening because most of the declines we're seeing in those numbers happened in the end of 2008 and the first three months of 2009," said Patrick Newport, an economist at IHS Global Insight. "We've seen dramatic turns in the numbers since then."

Still, both reports warn that despite price improvements, the housing market remains anemic and some parts of the country are more devastated than others. The sharpest price drops have been in areas where prices once soared. "Some of the hardest-hit cities, especially in the Sun Belt, show continued weakness," David M. Blitzer, chairman of the S&P index committee, said in a statement.

Putting pressure on prices is the oversupply of homes in the market and the number of foreclosures and other distressed properties. Those forces will continue to plague the market for several more quarters, analysts said.

The second problem? The total savings figure also ignores the time value of money.
Thanks to inflation, those dollars are going to be worth a lot less by the time you get hold of them than they would be today. Even if inflation only averages 2.5% a year, which is incredibly optimistic, a dollar in 30 years' time will only be worth 50 cents in today's money.

And that's not all. That figure also ignores the magic of compound interest.

Refinancing costs money. And that money, if you invested it instead of spending it on refinancing fees, could earn you a very good return. Especially over a long time period like 30 years.

Imagine your refinancing costs would be a fairly typical $2,000. If you socked that money away at just 5%, by 2039 you'd have $8,600

Brokers may be among the few making out in this economy -- which is ironic, because some (repeat: some) are the villains who got us into this mess in the first place.

But before you join the stampede, it's worth asking: When does it make sense to refi?

If you are planning to move or even pay off your loan within the next few years, refinancing probably makes little sense because you won't be paying monthly bills long enough for the savings to cover the costs.

On the other hand, in some circumstances, refinancing is pretty much a slam dunk.

If you plan to stay in your home for years, and you are currently in an adjustable-rate mortgage, you should strongly consider a refi. ARMs are incredibly dangerous -- the financial equivalent of Russian roulette, but with multiple bullets. Refinancing into a 30-year fixed-rate loan may not cut your current monthly payments by much, but it gets rid of the risk that those payments will suddenly skyrocket.

Refinancing also usually makes sense if you are currently paying a much higher rate, though few homeowners are any more.

As a rule of thumb, Greg McBride, economist at Bankrate.com, looks for a payback period of a couple of years. "Generally, if you can earn the costs back within two to three years, and it's a home you're prepared to stay in for much longer than that, it's usually a good thing," he says.

But if the savings are more marginal, you need to do the math.

Some mortgage brokers will tell you how much interest you will save "over the life of the loan" if you refinance.

It's usually a very large number. But it should also be taken with a grain of salt.

First, that number ignores taxes. Mortgage interest is deductible from your income tax. So paying less interest may mean you will pay slightly higher taxes.

The refinance share of applications increased to 53.3 percent from 52.3 percent the previous week, but remained significantly lower than the peak of 85.3 percent in the week ended January 9. The adjustable-rate mortgage share of activity increased to 6.5 percent in the latest week, up from 5.8 percent the previous week.

Fixed 15-year mortgage rates averaged 4.52 percent, down from 4.71 percent the previous week. Rates on one-year ARMs decreased to 6.66 percent from 6.71 percent.

Home price declines will have their biggest impact on prime "conforming" loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements.

"We project the next phase of the housing decline will have a far greater impact on prime borrowers," Deutsche analysts Karen Weaver and Ying Shen said in the report.

"The impact of this is significant given that these markets have the largest share of the total mortgage market outstanding," the analysts said. Prime jumbo loans make up 13 percent of the total market.

Deutsche's dire assessment comes amid a bolt of evidence in recent months that point to stabilization in the U.S. housing market after three years of price drops. This week, the National Association of Realtors said pending home sales rose for a fifth straight month in June. A widely watched index released in July showed home prices in May rose for the first time since 2006.

Covering 100 U.S. metropolitan areas, Deutsche Bank in June forecast home prices would fall 14 percent through the first quarter of 2011, for a total drop of 41.7 percent.

The drop in home prices is fueling a vicious cycle of foreclosures as it eliminates homeowner equity and gives borrowers an incentive to walk away from their mortgages. The more severe the negative equity, the more likely are defaults, since many borrowers believe prices will not recover enough.

Homeowners with the riskiest mortgages taken out during the housing boom have seen the greatest erosion in equity, in part because they were "affordability products" originated at the housing peak, Deutsche said. They include subprime loans, of which 69 percent will be underwater in 2011, up from 50 percent in March, Deutsche said,

Of option adjustable-rate mortgages -- which cut payments by allowing principal balances to rise -- 89 percent will be underwater in 2011, up from 77 percent, the report said.

Regions suffering the worst negative equity are areas in California, Florida, Arizona, Nevada, Ohio, Michigan, Illinois, Wisconsin, Massachusetts and West Virginia. Las Vegas and parts of Florida and California will see 90 percent or more of their loans underwater by 2011, it added.

Difference Between Equity Key Mortgage vs Reverse Mortgage

The Commerce Department said Monday that sales rose 11 percent in June to a seasonally adjusted annual rate of 384,000, from an upwardly revised May rate of 346,000.

It was the strongest sales pace since November 2008 and exceeded the forecasts of economists surveyed by Thomson Reuters, who expected a pace of 360,000 units. The last time sales rose so dramatically was in December 2000.

The report is another encouraging sign that the beleaguered housing sector is finally coming back to life. Last Thursday, the National Association of Realtors reported that home resales posted a monthly increase of 3.6 percent in June.

There were 281,000 new homes for sale at the end of June, down more than 4 percent from May. At the current sales pace, that represents 8.8 months of supply — the lowest level since October 2007.

Fallout from the housing crisis has played a central role in the U.S. recession, now the longest since World War II. Foreclosures have spiked, homebuilders have slashed construction, and financial companies have lost billions.

The mushrooming foreclosure crisis affected more than 1.5 million homes in the first six months of the year, according to a report released Thursday by foreclosure listing service RealtyTrac Inc.

The data show that, despite the Obama administration's plan to encourage the lending industry to prevent foreclosures by handing out $50 billion in subsidies, the nation's housing woes continue to spread. Experts don't expect foreclosures to peak until the middle of next year.

• Should I use a Real Estate Broker
• Home Purchase Negotiation Process

Because of the tight credit market, a host of new alternatives to traditional financing are starting to emerge. If you are having trouble locating the right loan for your situation, here are just a few of the resources to consider:

Credit Unions Mortgages - Unlike banks and mortgage companies that sell their loans on the secondary money market, many credit unions actually keep the loans they make in their own portfolio. If the credit union does not sell the loan on the secondary money market, they can set their own loan requirements.

Real Estate Seller Financing - Did you know that approximately one-third of all property owners in the United States own their property free and clear? Given the low rate of interest being paid for savings accounts and for government securities such as T-bills, an increasing number of sellers are electing to carry part or all of the financing on their sale. This can be a win-win for both the buyer and the seller.