According to the latest S&P Case-Shiller index released Tuesday, national U.S. home prices fell by historic margins again in October, an indication of a weak economy and a continued foreclosure crisis.

“The bear market continues; home prices are back to their March 2004 levels,” says David Blitzer, Chairman of the Index Committee at Standard & Poor’s. He added, “As of October 2008, the 20-City Composite is down 23.4%. In October, we also saw three new markets enter the ‘double-digit’ club.”

Those markets included Atlanta, Seattle, and Portland, each with a yearly price decline rate of about 10 percent.

“While not yet experiencing as severe a contraction as in the Sunbelt, it seems the Pacific Northwest and Mid-Atlantic South is not immune to the overall demise in the housing market,” Blitzer added.

Cities that had already been experiencing price declines saw deeper plunges with prices dropping more than 30 percent during the past year in the Las Vegas, Phoenix, and San Francisco markets. Other severely impacted markets were Miami with a 29 percent yearly price decrease, Los Angeles with 28 percent, and San Diego with  27 percent.

“October was really the first month to feel the full brunt of the credit crunch,” he said. “Up until the Lehman Brothers [bankruptcy filing on September 15], everyone felt relatively optimistic.”

Massive amounts of foreclosures and short sales were also contributing factors in the most recent numbers, as almost 85,000 homes were repossessed in foreclosure proceedings during October.

Demand for homes is also continuing to drop as the National Association of Realtors reported an 8.6 percent decrease in existing home sales in November.

One potential bright spot on the horizon is historically low mortgage interest rates. During the week of December 31, 2008, the average rate on a 30-year fixed rate loan fell to an unprecedented 5.10 percent, excluding fees. Lower rates could make it much easier for many Americans buy new homes or get into the housing market for the first time, creating a larger appetite for housing and causing prices to stabilize again in many areas.

Average interest rates on U.S. mortgage loans fell for the ninth consecutive week, according to mortgage giant Freddie Mac Wednesday, falling to a new all-time low, making mortgage loans more palatable to borrowers around the country.

The rate on a 30-year fixed rate loan dropped to 5.10 percent, excluding fees, during the week ended December 31, 2008, down from 5.14 percent. One year ago, the average rate was almost an entire point higher at 6.07 percent.

“Interest rates for 30-year fixed-rate mortgages fell for the ninth straight week and represented a third consecutive all time record low since Freddie Mac’s survey began in April 1971,” said Frank Nothaft, Freddie Mac vice president and chief economist. “… As a result, the number of refinance applications for conventional mortgages jumped over 500 percent between the weeks ending on October 31st and December 26th.”

“Lower rates and falling house prices are also making homeownership more affordable to potential homebuyers,” Nothaft added. “For instance, house prices fell 18 percent over the 12-month period ending in October, according to the S&P/Case-Shiller 20-city composite index. Every city posted a second consecutive month of decline in October. From its peak set in July 2006, the composite index is down 23.4 percent.”

Rates also dropped significantly on the 15-year fixed rate mortgage to an average of 4.83 percent from 4.91 percent the previous week, representing a four and a half year low. Last year at this time, the average rate was 5.68 percent.

Short-term loans also experienced interest rate drops as the one-year adjustable rate mortgage carried an average rate of 4.85 percent, down from 4.95 percent one week earlier. During the same week in 2007, the average rate was 5.47 percent.

Interest rates on U.S. mortgage loans fell for the third straight week as economic data showed weaker prospects for the future, according to mortgage giant Freddie Mac Thursday.

“Long- and short-term mortgage rates fell for the third consecutive week amid continuing signs of a slowing economy,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Retail sales fell for the fourth straight month in October and consumer sentiment remained near a 28-year low in November.

“In fact, the Federal Reserve during its October 28-29 committee meeting lowered its economic growth forecasts for 2008 and 2009, according to its minutes released this week.”

In response to such disheartening news, home loan lenders lowered their rates on 30-year fixed rate mortgages to an average of 6.04 percent, during the week ended Nov. 20, excluding points, down from 6.14 the previous week and 6.20 percent one year ago.

The average interest rate on 15-year fixed rate loans dropped to 5.73 percent from 5.81 percent the week before. At this time last year the average rate was 5.83 percent.

Rates on one-year adjustable rate mortgages averaged 5.29 percent, a decrease from 5.33 percent a week earlier and from 5.42 percent the previous year.

Freddie Mac complies its survey of weekly interest rates from roughly half of all lenders in the country. It is a “stockholder-owned corporation established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets,” although recent financial crises have forced the federal government to place the company into a conservatorship. This government control period is designed to get the company operating on a financially-sound basis again and to make sure that mortgage money remains available for qualified borrowers.

Mortgage giant Freddie Mac has released its monthly forecast, showing less confidence in the U.S. mortgage market now than it did last month. The forecast from the company’s Office of the Chief Economist lowered expectations on almost all aspects of the housing sector following a month of more economic turmoil.

Freddie Mac now believes that mortgage demand will not rebound until 2010. The forecast predicted that mortgage originations were likely to fall by 8 percent to $1.65 million in 2009 before expanding to $1.82 trillion the following year. In October, Freddie believed that mortgage originations would increase to $1.92 trillion in 2009 and grow to $2.04 trillion in 2010.

The forecast also showed lowered estimates of home sales in 2009. Freddie Mac had previously projected home sales hitting 4.86 million in 2008 and rising to 5.13 million next year, but new data suggest that while there may be more home sales this year, no more than 5 million sales are likely for 2009.

Similarly, home prices are now expected to suffer more next year as well. As of last month, Freddie Mac expected the Standard & Poor’s Case-Shiller national home price index to fall by 13 percent in 2008, by 5.1 percent in 2009, and by 2 percent in 2010. The new predictions are that the indexed prices will drop by 13.9 percent this year, by 7.8 percent next year, and still fall 2 percent in 2010.

Exacerbating the housing downturn will be rising interest rates. Freddie Mac forecasts that rates on 30-year fixed rate home loans will average 6.1 percent this year and grow to 6.3 percent over the next two years. Last month, the company predicted that interest rates would drop to 5.9 percent in 2009 before rising to 6.2 percent in 2010.

All of these predictions were fueled by weaker employment and economic data. Freddie Mac predicts that unemployment will swell to 7.5 percent in 2009 while the gross domestic product (GDP) will only grow by 1.3 percent during the same year.

A volatile economy continued to affect the U.S. mortgage market this week, causing mortgage demand and interest rates to plummet.

According to the Mortgage Bankers Association’s index, home loan application volume decreased by 20.3 percent to a a seasonally adjusted index reading of 379.9 during the week ended Oct. 31.

Both refinance and home purchase loan requests were lower in the latest week, with the MBA’s refinance index falling 27.8 percent o 1075.4 and the purchase index sinking 13.9 percent to 260.9.

Refinances made up only 42.9 percent of all mortgage requests, compared with 46.9 percent the previous week.

During the roughly the same time, interest rates on long and short term home loans fell as well, according to Freddie Mac Thursday.

“Mortgage rates fell this week amid new indications of a pullback in consumer spending and a weaker jobs market,” said Freddie Mac vice president and chief economist Frank Nothaft.

The average rate on a 30-year fixed rate mortgage decreased to 6.20 percent, excluding fees, from 6.46 percent the week before. One year ago, the average rate was 6.24 percent.

Rates on 15-year fixed rate loans dropped to 5.88 percent from 6.19 percent. At this time last year, 15-year mortgages averaged a rate of 5.90.

One-year adjustable rate mortgages carried an average rate of 5.25 percent, down from 5.38 percent one week earlier. Last year, the average rate was 5.50 percent.

According to Nothaft, tighter lending standards are having the biggest impact on demand and rates.

“With the economy contracting and experiencing record home foreclosures, lenders tightened their credit standards further, according to the October Federal Reserve Senior Loan Officer survey,” he said. “Approximately 70 percent of banks raised their lending standards for prime mortgages and about 90 percent of banks that offer nontraditional mortgages did so as well.”

Long-term mortgages rates climbed higher during the latest week as U.S. Treasury bond yields increased, according to mortgage giant Freddie Mac Thursday.

In its weekly mortgage market survey, Freddie Mac found that the average interest rate on a 30-year mortgage loan jumped to 6.46 percent, excluding fees, during the week ended Oct. 30, 2008, up from 6.04 percent the previous week. One year ago, the average rate was 6.26 percent.

“Long-term mortgage rates followed long-term Treasury bond yields higher this week, pushing fixed-rate mortgages up to levels of two weeks ago,” said Frank Nothaft, Freddie Mac vice president and chief economist. Analysts have noted that many safety-minded investors have flocked to the dependable returns of Treasury bonds lately, scared away from volatile Wall Street investments.

Nothaft also commented on other types of loan interest rates. “The Federal Reserve’s 0.50 percentage point cut in the discount rate and federal funds target rate on Wednesday was widely anticipated in the financial markets and is likely to keep short-term interest rates low; consequently, initial interest rates on ARMs, which tend to be set relative to other short-term rates, may remain near current levels.”

Rates on 15-year fixed rate home loans averaged 6.19 percent, an increase from 5.72 percent the week before. Last year at this time, the average rate was 5.91 percent.

Interest rates on one-year adjustable rate mortgages also jumped, moving up to 5.38 percent from 5.23 percent last week. During the same week in October 2007, one-year ARMS averaged 5.57 percent.

Nothaft additionally mentioned other positive market factors that have influenced the direction of rates recently. “In other news,” he said, “house-price declines in many markets have improved housing affordability and stimulated home sales. In September, sales of existing homes rose 5.5 percent while sales of new homes were up 2.7 percent, at a seasonally-adjusted annual rate.”

Average interest rates on long-term U.S. home loans increased by the fastest pace in over twenty years during the latest week, according to mortgage giant Freddie Mac Thursday.

The company reported that 30-year fixed-rate mortgages carried an average rate of 6.46 percent, excluding fees during the week ended Oct. 16, a growth of 52 basis points from 5.94 percent the week before. That represents the largest weekly increase since the middle of April 1987. The current rate is even up from last year at this time when the rate was 6.40 percent.

The average rate on 15-year fixed rate loans rose to 6.14 percent during the previous week, from 5.63 percent. One year ago, the average was 6.08 percent.

One-year adjustable rate mortgages (ARMs) saw little change, however, as the average rate inched up to 5.16 percent from 5.15 percent a week earlier. Last year, the average rate was 5.76 percent.

“Interest rates for 30-year fixed-rate mortgages rose this week to an 8-week high,” said Frank Nothaft, Freddie Mac vice president and chief economist. “ARM rates, which tend to be based on shorter-term benchmarks, showed smaller gains in part due to the Federal Reserve’s October 8 inter-meeting rate cut in the overnight lending rate.

“Recent economic reports suggest the economy is still slowing. For instance, retail sales fell for the third consecutive month by 1.2 percent in September. In addition, in its latest Beige Book, released October 15th, the Federal Reserve indicated that economic activity weakened in September across all twelve Federal Reserve Districts and that several Districts also noted that their contacts had become more pessimistic about the economic outlook.”

On a regional level, average rates on 30-year mortgages were highest in the Southeast at 6.51 percent, excluding fees, and lowest in the West at 6.37 percent.

As financial markets around the globe seized in turmoil Wednesday, the Federal Reserve along with five other central banks made emergency cuts to their target interest rates by a half point.

“Incoming economic data suggest that the pace of economic activity has slowed markedly in recent months,” the Fed said in its Wednesday night statement. “Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit. Inflation has been high, but the Committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation.”

In an unprecedented and concerted effort, the Fed joined with the European Central Bank, the Bank of England, the Swiss National Bank and the Swedish Bank in trimming back already low rates to stimulate more positive economic activity and provide greater liquidity to the parched markets.

The U.S. federal funds rate now stands at 1.5 percent, its lowest level in more than four years.

The worldwide slash of interest rates did little to bolster consumer confidence however, as the Dow took another roller coaster ride on Thursday, closing down 678.91 points at 8,579.19. The NASDAQ also fell, dropping to 1,645.

Yet Olivier Bernard of the International Monetary Fund explained the Banks’ decision was primarily designed to head off deeper crisis, not serve as a “wonder drug” for the global economy. “The crucial role of both financial and macro economic policies at this juncture: it is clearly too late for responses to avoid the slowdown but they can be used to head off the risk of even more dire outcomes.”

Uncertainty among lenders and investors about the near future of the economy led to a rise in U.S. mortgage interest rates in the latest week, according to a recent survey from mortgage giant Freddie Mac.

During the week ended Sept. 25, 2008, the average rate on a 30-year fixed rate home loan climbed up to 6.09 percent, excluding points, from 5.78 percent the week before. One year ago, the average rate rested much higher still at 6.42 percent.

“Mortgage rates followed Treasury bond yields higher this week amid market uncertainty over the current state of the economy,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Compared with last Thursday, 10-year Treasury yields are up about 0.3 percentage points, and 30-year fixed-rate loans moved up about the same amount. And while up, interest rates for 30-year FRMs are still more than 0.5 percentage points below this year’s peak of 6.63 percent set the week of July 24th.”

Nothaft also cited other market indicators as cause for the increasing rates. Because soft economic data is often reflected in national mortgage rates, he mentioned that home prices dropped 5.3 percent during the year ended in July according to the Federal Housing Finance Agency’s index. The National Association of Realtors similarly announced a 9.7 decrease in the August median sales price for existing single-family homes, a clear sign that the housing market has not yet hit bottom.

Rates on 15-year fixed rate mortgages also shot up in the past week, reaching 5.77 percent, excluding points, from 5.35 percent the previous week. One year earlier, the average rate was 6.09 percent.

The average rates on both five-year and one-year Treasury-indexed adjustable rate mortgages (ARMs) also increased, with five-year ARMs growing to 6.02 percent from 5.67 percent and one-year ARMs averaging 5.16 percent, up from 5.03 percent the a week earlier. Last year at the same time, the average rates for five-year ARMs and one-year ARMs were 6.15 percent and 5.60 percent, respectively.

Mortgage giant Freddie Mac reported Thursday that interest rates on 30-year fixed rate mortgages made their largest week-to-week decrease this week in almost 28 years , falling 0.42 percentage point.

On news of the Federal Government’s bailout of Freddie Mac and sister corporation Fannie Mae, the national average rate dropped to a five-month low of 5.93 percent, with an average 0.7 discount point, during the week ended Sept. 11 from 6.35 percent the previous week and from 6.31 percent on year earlier.

“Interest rates for 30-year fixed-rate mortgages are down almost 0.6 percentage points over the past 4 weeks, which will help to spur home purchases and loan refinancing in coming weeks,” said Frank Nothaft, Freddie Mac’s vice president and chief economist. “This means that the monthly principal and interest payment on a new $200,000 loan is over $76 lower than a month ago.”

Fifteen-year fixed rate home loans also experienced an interest rate decrease to 5.54 percent from 5.90 percent last week. One year ago, the average rate was 5.97 percent.  Rates on one-year adjustable rate mortgages (ARMs) rose in the latest week, however, to 5.21percent, from 5.15 percent. Last year at this time the average was 5.66 percent.

Another report released Thursday showed that America’s riskiest home buyers are largely being shut out of the mortgage market. The Federal Reserve’s Home Mortgage Disclosure Act report revealed that as mortgage delinquencies and failures rose in 2007, home loan financing for sub-prime or poor credit borrowers decreased dramatically.

“One consequence of deteriorating loan performance and widespread declines in home values was a sharp contraction in 2007 in the willingness of lenders and investors to offer loans to higher-risk borrowers or, in some cases to offer to certain loan products that entailed features associated with elevated credit risk,” the Federal Financial Institutions Examination Council said in the report.

Total mortgage applications last year fell to 21.4 million, down 22 percent from 2006, and loan originations slipped to 10.4 million in 2007, a decrease of 25 percent from the previous year.

The riskiest of loans were also by and large taken off the market. Undocumented income loans fell 69 percent from 2006, a sign that lenders had been badly burned by mass failure of these “liar loans.”

These trends have certainly continued into 2008, with analysts expecting little change in strict mortgage requirements and home loan credit availability through the end of next year.