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Mortgage rates this low has not been seen since mid 1950. However, thanks to tightening underwriting guidelines and lackluster consumer confidence – loan application has been dismal. No one expects falling rates to energize the economy. Consumers are still concerned about their jobs and financial well being. Rates have fallen over the past two months as investors have become nervous about Europe’s debt crisis and the global economy and have shifted money into safe treasury bonds. The demand has caused Treasury yields to fall and mortgage rates to fall in tandem. Americans normally rush to refinance when rates plummet. But refinancing activity now amounts to less than half the level of early 2009 when long-term rates hovered around 5%.

Some of the reasons are:

1. Many homeowners already refinanced last year when rates fell below 5% in March, August and December. 
2. Many homeowners do not have enough equity or are in reverse equity (owe more than the house is worth). 
3. Many homeowners are not qualified due to income requirements (since stated income loan was eliminated).
4. Minimum FICO score of 620 is required.
5. All lenders are requiring Debt-To-Income (DTI) ratio not to exceed 45% (though can be exceeded to 55% with compensating factors).

Homeowners that pass the 4 Cs test (Credit, Capacity, Cash, and Collateral), do take advantage of this once in a lifetime opportunity.