Here's breaking news about mortgage rates.

From Forbes:

Recent additional declines in fixed mortgage rates have resulted in a veritable flood of new mortgage applications with the majority designated to refinance existing home loans.

One national index shows refi activity since Thanksgiving has risen above the level last seen back in July 2005, and refinancing as a percentage of total loan application volume rapidly has been approaching 60 percent of the pie from what had been a figure closer to 40 percent as recently as early September.

Typically, when refinance volume swells, it indicates consumers are on to a good thing. Similar spikes in activity have occurred during each major yield bottom in the mortgage rate cycle such as the one in June 2003.

With the government's widely publicized plan to assist subprime adjustable rate mortgage borrowers unlikely to help more than a tiny fraction of such home owners, it's becoming clear the responsibility for exiting ARMs will reside with each household.

Given the sheer volume of mortgage debt, it was never realistic to expect significant government assistance. Simply look at the numbers. Domestic residential real estate is estimated to be valued at roughly $20 trillion with $12 trillion of mortgage financing in place.

This $12 trillion figure is within close proximity to the amount of money generated by the U.S. economy on an annual basis.

Each year, the federal government only derives a bit more than $2 trillion of that sum in tax revenue. Therefore, the adjustable rate mortgage issue is bigger than the government's ability to deal with it directly. And that's why politicians are unable to deliver widespread relief.

In short, Santa Claus is unlikely to pop down your chimney with a new fixed-rate mortgage to replace your ARM. You'll have to do the heavy lifting yourself.

From the San Diego Union Tribune:

Homeowners desperately trying to save their dwellings from foreclosure in the subprime lending crisis say they are being led to a series of wrong turns, dead ends and blind alleys as they seek relief from lenders. “Sometimes it takes 45 minutes to an hour just to get to the right person” on the phone, said Adeline Enriquez of the nonprofit Community HousingWorks.

Enriquez's job is to help financially strapped homeowners sort through the red tape of easing adjustable-rate loan payments that are ratcheting up. “You have to be very persistent and call again,” she said. “They put on the music. They disconnect the phone call. I mean it is a mess.” As defaults soar, President Bush and Gov. Arnold Schwarzenegger are calling on lenders to put loan modifications on a fast track. Although lenders say they are trying to keep up with the growing pleas for assistance, changing the terms of a mortgage remains a frustrating and confusing process.

From thestreet.com:

While each day seems to bring more bad housing-related news, there is still money available at reasonable rates to finance the purchase of a home or refinance the loan on an existing home -- for the right borrowers. Rather than exiting the market, lenders have simply retooled their guidelines, turning their backs on riskier lending as they actively court qualified buyers. "Banks still need to make loans if they want to make money," said Steve Maizes, chief executive officer of the California office of Olympia West Mortgage. The key is in the creditworthiness of the borrower. "If you can prove income and have good credit, there should be no problem for you," said Bob Barron, a mortgage planner in the Solana Beach, Calif., office of Mortgage Loan Specialists Inc. "We're just going back to sane underwriting. Prove that you make the money to qualify for the house and pay your bills on time, and you will qualify for the loan."

I recommend these links about mortgage rates:

Mortgage Rates

Mortgage Rates

Mortgage Rates

Mortgage Rates

On December 18, 2007, Jonathan Chevreau writes for the National Post:

A group of three finance academics foresaw the looming U.S. subprime mortgage crisis at least three years before the problems started to become public early in 2007.
   Go here and you can find an as yet unpublished working paper entitled Default risk in the U.S. mortgage market.
   I talked to one of the report's three coauthors when he was in Toronto in the fall for the Northern Finance Association conference.  
    Toby Daglish is a native of New Zealand and a professor at the Victoria University of Wellington. Earlier in his academic career he had stints in North American universities. His two coauthors – Jon Garfinkel and Jarjisu Sa-Aadu – are both at the University of Iowa.
    When Daglish was in Iowa, he bought a house in Iowa City late in 2004 and arranged a mortgage through a small regional bank.  "I was thinking I was going to have to pay mortgage insurance there  but the lady from the bank said oh we're having a promotion this month and you don't have to buy mortgage insurance. I remember thinking that's not a very sound way to run your business."   
     That was the genesis of the paper which continues to be revised even as events overtake it. The paper used options analysis to analyze the default risk of various house financing strategies. One of the key findings is that the popular "zero down" floating-rate interest-only mortgages can lead to situations where default is optimal even after quite small declines in house prices.
   The August 14, 2007 version of the paper [still the most recent as of December] notes the explosion in housing starts and home prices the last three years coincided with a dramatic loosening of credit in the mortgage market. As lenders faced declining per-unit revenues as mortgage rates dropped, many simply opted to make more mortgage loans. As we now know all too well, the marginal borrowers approached by the banks "is likely declining in quality." The paper also notes the "secular rise in the percentage of mortgages written with zero down payments."  
  Daglish et al wrote that as interest rates rose on variable rate mortgages more borrowers would find them unaffordable, tempting many to walk away from the mortgage. As they do so, the excess supply will further depress housing prices.
   We noted in this earlier blog entry the hilarious British skit that explained the subprime mortgage crisis as having its origins with a mortgage salesman approaching an unemployed Alabama man in a "string vest" whose house was about to fall down.