the buzz log

No bailout. No bridge loans. Not even a cozy little congressional chat.

Now that the Federal Reserve has squished its lending rate to banks to nearly 0%, all that homeowners want is a little, itty-bitty break on mortgage interest rates. Just 1%. Maybe 2. And cross their hearts, with the money they'll save, they'll go out and buy a four-door sedan, two Nintendo Wiis, and an LCD TV bundled with a Blu-Ray player.

Before the latest cuts, homesteaders had been migrating to the Web for a chance at the new American dream: avoiding foreclosure. Lookups for "mortgage modification" nearly doubled in the past seven days.

The unprecedented Fed fire sale has a dual purpose: to prevent further foreclosures, and to woo new homebuyers. Plenty of others who own the roof over their head, however, have been itching to benefit from lower monthly payments. The Mortgage Bankers Association reported that mortgage applications climbed nearly 3%.

Searchers have been closely monitoring the cuts, especially since a federal regulator in mid-December let slip that the government might cut mortgage rates to below 4%. Besides online queries for economic terms like "current prime rate" (+831% in a one-day rise) and "fed rate cut" (+450%), "mortgage rates" have by far drawn the most online scrutiny, followed by "mortgage calculators."

People have also been tirelessly checking up on "wells fargo home mortgage," "gmac mortgage," and a bevy of other lenders such Countrywide, Chase, SunTrust, and Bank of America to find details on the "lowest mortgage rates," "mortgage refinance rates," and "current 30 year mortgage rates."

The impulse to buy or refinance could be reaching a tipping point: Normally, November and December are slow periods for such activities, but mortgage queries are reaching levels usually seen in the first quarter of the year (January-April). Massachusetts, Connecticut, and New Jersey have been conducting the most "mortgage rates" searches, while those at the "mortgage calculator" stage are mostly in Utah, Colorado, Minnesota, Rhode Island, and Washington, D.C.

But will those able to buy procrastinate a wee bit longer (as early searches for the "4.5 mortgage" seem to indicate)? Treasury Secretary Henry Paulson squelched that bit of hope like Ebenezer Scrooge and the Grinch on a relapse bender. But, as retailers and the people who track the Consumer Price Index learned this year, buyers have learned Zen patience. Plus, the Fed's plan to "expand a massive mortgage debt purchase program" could lower rates even further, although the magic 4% range seems unlikely.

As for when to take the leap, Yahoo! Finance takes on the question, "Should You Refinance Your Mortgage Now?" It also doesn't hurt to ask brokers or loan officers if they offer a 60-day lock that gives you the option to take advantage of lowered mortgage rates. The odds are low that they do (and if so, its likely you'll be charged), but asking is free (so far).

Filed under: Finance, Money, Housing, Government, Economics, Interest Rates