Mortgage applications rose 3.2% in the week ending February 23 and were up 8.8% vs. the same week last year according to Mortgage Bankers Association. The average rate for 30-year fixed rate loans fell to a 7-week low of 6.16%.

Good news for those applying for mortgages. Mortgage rates sunk to 6.18% with the benchmark 3-year fixed rate mortgage indicator, ending November 22. The rate had been 6.24% one week earlier and a year ago it stood at 6.8%.

Applications for new home buyers slid 2.8% and applications for all mortgages fell 3.7% for the week of November 17^th.

The 5-year adjustable mortgage stayed at 6%. The 1-year ARM averaged 5.46%, which is a 6-month low.

Notwithstanding, mortgage application index soared to its highest level since January. The activity shot up 17% according to the Mortgage Bankers Association.

Meanwhile, job growth is seen as sluggish even as jobless claims fall for the 4^th drop in five weeks. Private employers added 78,000 jobs in September. U.S. factory orders were flat in August and CEO’s are gloomy on future of the economy. The Business Council and Conference Board said that 45.6 % of the CEO’s polled expect the economy to worsen over the next 6 months.

Mortgage applications rose 8.1% and refinancing applications surged. The 30-year fixed rate mortgage fell 15 basis points to 5.98% last week which was the lowest since October 2005.

Home builder stocks rose on the data which was further fueled by a Toll Bros., the luxury home builder. Report that they anticipate a market bottom. Additionally, Citigrop upgraded the home builder stock sector.

Nationwide, one in every 92 households is in foreclosure with Nevada having the highest foreclosure rate! According to RealtyTrac, more than 1.2 million foreclosure fillings were reported in the U.S. last year. Foreclosures could rise as some 1.5 trillion in adjustable-rage mortgage get repriced this year. Couple that with declining home prices and increase property taxes and one can be whistling some sour notes.

Home prices fell in 17 out of 20 cities in November compared with October 2006 data according to a recent MacroMarkets and Standard and Poors report. Although home prices in some cities did rise, nation wide there is no sign of the downtrend in real estate prices slowing down.

Property tax rates continue to skyrocket in many areas because of weak-kneed elected officials not reigning in expenses or living within town budgets. Many municipalities are soft on curbing excesses or cutting budgets. Rising property tax payments make many homeowners budgets too tight and they are not able to keep up.

Many banks have promoted hybrid and adjustable mortgage loans some with no and others with low down payments. With delinquent mortgage payments and foreclosures far above year-ago levels, indications are that hard financial times are gaining on many. Ballooning interest rates often surprise those who hold an adjustable-rate or sub-prime mortgage and when it is time to refinance, many are left with no option but foreclosure.

Some banks were, in some cases, even selling houses and forgiving debt. Do some of these banks feel some culpability for some creative loans they have saddled the homebuyer with? If they studied their customers' financial profile, they might never have made those loans. Do these banks fear scrutiny given the strong likelihood that their customers mortgage interest rate would be higher and unaffordable upon the refinance period? It's not unreasonable to expect mortgage rates to return to that double-digit territory as the economy cycles through a downturn.

A hybrid mortgage may be an appropriate choice if one plans to live in their house only for three or four more years. The first years of a hybrid loan are generally charged at a lower rate than traditional fixed-rate loans and if one plans to move and sell the home in a few years, it makes sense. If, for some reason, one don’t sell the home, they’re gambling using any form of a hybrid mortgage loan since it converts to an adjustable rate.

Hard times and rising payments make for tight budgets. If one wants predictability and the security of paying the same interest rate for the life of the loan, a fixed-rate mortgage is the smart choice. Rates are still low, by historical comparisons and given many economic forecasts of a weaker dollar and predictions for higher interest rates, locking in a fixed rate will reward one with peace of mind.

Unsold home inventory shot up 5.9% in February to 3.75 million while the average 30-year fixed-rate mortgage was 6.16% in February according to Freddie Mac.

Existing-home sales 3.9% rise in sales for February. It would take 6.7 months to sell off the excess inventory of homes at the current real estate sales pace.

Subprime woes have left the housing industry in an adjustment phase with borrowers with poor credit defaulting on mortgage loans. Estimates suggest it will cut housing demand by 100,000 to 200,000 units annually.