Have Mortgage Rates Hit Bottom?

The Federal Reserve's efforts to lower mortgage rates, generally considered successful on Wall Street and in the central bank's own corridors, may have hit a wall as a surge in refinancing has discouraged lenders from lowering rates even more.
Analysts are saying that benchmark rates, which have fallen nearly 1 percent since late November to a little over 5%, according to Freddie Mac's survey of 30-year conventional mortgages, are likely to range between about 5% and 5.25% for the next several months.
That's low by historical standards, and a sharp drop from November's levels before the Fed intervened directly in the mortgage market. But it's higher than the 4.5% level that some analysts said last year was needed to ease U.S. housing woes and well above the 2% rate that is what some troubled borrowers may be able to negotiate under the government's mortgage-modification guidelines.
At the same time, rates on mortgage-backed securities -- the pooled mortgages that the Fed has been buying in an effort to drive down rates -- have continued to fall, and by a greater degree, than consumer rates on mortgages. This means home buyers, while getting a lot of the benefit of the Fed's purchases of mortgage-related securities, aren't getting it all.
Keeping mortgage rates from falling further is a jump in refinancings this year as homeowners rush to take advantage of the slide in mortgage rates.