A frequent question voiced in dinner party circles in this neck of the woods (the metropolitan New York City area) is, 'How low will home mortgage rates go?'

That question is usually accompanied by, 'Should I refinance now, or wait?' if the inquirer already owns his/her residence.

To the latter, I usually respond with, if you can lower your fixed mortgage rate by 1.50 percentage points (150 basis points in Wall Street terms), and total closing costs can be recovered in 30 months, it usually makes sense to refinance.

Mortgage applications increased 7.5% for the week ended July 4, 2008, the Mortgage Bankers Association announced Wednesday.

The Mortgage Bankers Association's composite index of applications increased to 513.4, on a seasonally-adjusted basis, from last week's 477.7.

Compared to a year ago, the composite index is down 18.1% on an unadjusted basis.

The Refinance Index increased 8.7% to 1,379.3 from 1,269.2 the previous week and the seasonally adjusted Purchase Index increased 6.7% to 365.8 from 342.8 one week earlier.

Meanwhile, the average rate for a 30-year fixed loan increased slightly to 6.43% from 6.33% the prior week. The average rate for a 15-year fixed mortgage increased to 5.94% from 5.90%.

Mortgage applications decreased last week, as an increase in borrowing costs discouraged mortgage refinancing activity, the Mortgage Bankers Association announced Wednesday.

The Mortgage Bankers Association's composite index of applications declined 8.7% on a seasonally-adjusted basis to 508.6 from last week's 557.1. Compared to a year ago, the composite index is down 21.3% on an unadjusted basis.

The Refinance Index decreased 15.0% to 1,378.6 from 1,622.1 the previous week and the seasonally adjusted Purchase Index decreased 4.3% to 360.2 from 376.2 one week earlier.

Mortgage rates rise

Meanwhile, the average rate for a 30-year fixed loan rose to 6.57% from 6.24% the prior week. The average rate for a 15-year fixed mortgage increased to 6.14% from 5.78%. Also, the share of applications that involved a refinance declined to 37.4% from 39.8% one week earlier.

My Ph.D. adviser David E. RePass, professor emeritus at the University of Connecticut, used to frequently recite an axiom about the U.S. Congress that rings true, regardless of era, or circumstance.

"Congress does not react, unless not reacting will result in the wrath of the American voter."

Well, concerning housing, it looks like Congress sees the wrath of the American voter ahead because the legislative body is starting to react.

Two measures working their way through Congress may ease the housing crisis. The first, a bipartisan Senate measure, is a modest step to address the rise in home foreclosures, The New York Times reported Friday.

Mortgage applications decreased for the first week in six on a decline in both purchase and refinance activity, the Mortgage Bankers Association said today.

The Mortgage Bankers Association's composite index decreased 2.1% last week to 1063.5 from 1086.6 a week earlier.

The refinance index decreased 3% to 4901.5 from 5054.0 the previous week and the seasonally adjusted purchase index decreased 0.3% to 403.9 from 405.3 one week earlier.

Meanwhile, the average rate for a 30-year fixed loan rose to 5.72% from 5.61% the prior week. The average rate for a 15-year fixed mortgage increased to 5.18% from 5.09%.

Economist Steve Affinito said mortgage rates remain relatively low, but mortgage activity is likely to remain sluggish for several quarters, as the sector resumes a more sustainable activity pace.

"Rates remain attractive, but with tougher underwriting standards and with just fewer people in the market for homes, mortgage activity will reflect the sector's doldrums through at least Q3 of this year," Affinito said. "And I must underscore it's a borrower market that favors applicants with good credit histories."

Mortgage applications increased a seasonally-adjusted 8.3% compared to the prior week on continued, lower interest rates, the Mortgage Bankers Association announced Wednesday in a statement.

Furthermore, the association said refinance applications rose 16.9% during the week ended January 18, 2008 compared to the previous week, and are up 92% since November 2007. Purchase applications are up 7% during the same period. Also, the 4-week moving average for all loan applications increased 13.7% compared with the same period a year ago.

The average interest rate for the 15-year fixed-rate mortgage was 4.96%, down from 5.07%. The 30-year fixed-rate mortgage was 5.49%, down from 5.62%. The rate for a one-year ARM was 5.51%, down from 5.77%.

Countrywide Financial Corporation (NYSE: CFC), the leading stand-alone mortgage lender, said yesterday it will modify terms on some 25,000 home loans this year to help homeowners avoid foreclosures.

To date, the lender has already modified more than 17,000 home loans in 2007 and provided assistance to an additional 35,000 mortgages, via adjusting prepayment plans, postponements of payments and refinancings.

Countrywide said by limiting foreclosures it actually may be able to better control expenses since restructuring mortgages can be costly. It also will be pleasing to politicians as a report released by the Joint Economic Committee, chaired by Democratic Sen. Chuck Schumer of New York pointed out foreclosure can result in up to $80,000 of losses for the homeowner, lender, local government, and neighbors whose homes fall in value. Preventing a foreclosure costs $3,300, the report said.

Once again, Angelo Mozilo, Countrywide's CEO, appears to have found the balance of good business, good politics and good customer service.

More Countrywide Financial news

Douglas McIntyre: Countrywide (CFC) hires a PR firm
Peter Cohan: Is Countrywide (CFC) too big to fail?
Zac Bissonnette: Let Mozilo provide Countrywide (CFC) with cash
Douglas McIntyre: Could subprime problems hurt search engines?
Peter Cohan: Is Bank of America's (BAC) purchase of Countrywide Financial (CFC) a good bet?
Joseph Lazzaro: The (still) foggy subprime mortgage sector
Peter Cohan: What the mortgage meltdown means to you
Eric Buscemi: George Bailey, meet Angelo Mozilo
Michael Fowlkes: Countrywide Financial (CFC) adds to subprime panic
Peter Cohan: Could Countrywide Financial (CFC) be put down?

Countrywide Financial-(NYSE-CFC) Put volume & implied volatility Spikes on sell off. CFC, the largest U.S. home mortgage lender, is recently down $3.16 to $21.40. CFC call option volume of 98,035 contracts compares to put volume of 191,635 contracts. CFC September option implied volatility of 141 is above its 26-week average of 55 according to Track Data, indicating larger price fluctuations.

ExxonMobil-(NYSE-XOM) September implied volatility of 31 above 26-week average of 24. XOM is recently up .65 to $83.76. Crude oil futures are up 1.02% to $73.12 according to Bloomberg. XOM September option implied volatility of 31 is above its 26-week average of 24 according to Track Data, suggesting larger price fluctuations.

In this multi-part personal finance series, readers will learn various ways to help save money for a college education, from off-the wall-scholarships and 529 programs to the right time to refinance your loans. Parents and students alike who read this series will find something to help reduce the costs of a higher education before, during and after it takes place.

Part III: Work For It

When my friend James was in college, his parents made him learn the value of a dollar the hard way. They forced him to work during his education and didn't give him cent towards his schooling. He took out student loans and worked several jobs in his four-year stint at State, from after-school swim instructor to late-night security guard, he worked them all. Believe me; after all those hours of working while going to school full-time, he learned the value of a dollar. What he didn't know at the time, was the amount of college loans that piled up in the four years he was away.

Here are a few ideas that could help you not make the same mistakes he made: