Mortgage Loan Applications Up This Past Month

Banks and lending institutions are reporting an uptick in mortgage applications in the last quarter, with a marked 4.1% increase image in the last week alone. Lenders postulate that market volatility and uncertainty with continue to drive mortgage-lending rates to unprecedented lows.Great time to refinance or buy a new homeFor people with the cash for a down payment, home buying has never been cheaper. Mortgage interest rates over the last century have seen highs nearing 20%--unheard of in today's market. Potential buyers and individuals looking to refinance on existing mortgages will be required to fork out a chunk of change, as banks are now wary lending more than 80% of a home's equity. Those who are fortunate enough to have the cash on hand for a down payment can look forward to 15 year and 30 year mortgages with interest rates that will cost them a fraction of what borrowers were paying only a couple years ago.Financial experts bemused by counterintuitive "new" economyWithout a doubt, poor economic performance across the board is driving mortgage rates to newer lows. In what is often regaled as a conundrum of the global and US economy, the federal government, playing its part as a steward of sound economic policy, must set an ultra-low prime rate to inspire buying, trading on Wall Street and consumer spending. For the federal government, that means less money is flowing into federal coffers as big banks pay less interest transferring money and issuing loans via the Federal Reserve.For banks and borrowers, a low prime rate equals new opportunity to save on interest and make money. Banks liberated from high interest rates at the Federal level can pass on savings to new borrowers. In effect, the prime rate dictates the interest rate index for new mortgages, and has remained low as federal regulators angle for positive economic growth. However, because the economy has been in the tank since 2007, there are fewer new homebuyers with cash reserves and credit to exploit.Federal Reserve will keep prime rate low until 2013, at leastAs bad news seems to follow bad news during this current period of perceived US economic recovery, the credit rating agency S&P has downgraded the United State's credit rating from Excessive Traffic triple-A, sterling status to AA+. Ostensibly this means investors in Treasury Bonds stand to lose money, as the United States is perceived by investors as being a subprime and insolvent borrower. Financial experts say that, for investors and individuals alike, this could spell a double-dip recession, as new credit will be more expensive and harder to come by.In order to combat the ominous credit rating decision by S&P, the US Treasury has assured lenders and investors it will keep the subprime rate around 3.5% over the next two years. Anyone looking to refinance or buy a new home can safely expect a bargain interest rate on their mortgage so long as they buy before pervasive economic recovery.