Low Mortgage interest rates are on its all-time low levels and are expected to get even lower with the Federal Reserve’s move to buy up government debt.  But it won’t be easier to get credit even for those who have good credit as credit standard further tightened.

Bankrate.com reported Thursday that the average interest rate on a 30-year fixed mortgage fell to 5.29%, compared with 5.37% in the prior week. In January, rates fell as low as 5.28%. This week's Bankrate.com data consider the effects of the Fed's Wednesday announcement that it will purchase $300 billion in long-term government debt.

Low Approval Rates

Mortgage Bankers Association estimates that about half of all mortgage applicants are being rejected as lenders have become stricter due to the credit crisis. Home mortgage applications jumped 30 percent in the week ended March 13. Driven by a surge in demand for refinancing as a result of the drop in the average rate on 30-year fixed-rate home loans but the approval rates are expected to go down further.

Refinancing approvals remained more or less unchanged but the approval rate on mortgage applications dropped 10 percentage-point from 63 percent in the first half of 2007 to 53 percent in the first half of 2008.

Credit scores for those of borrowers receiving mortgages have been on the rise during the past few years.

According to the MBA, borrowers with 750 or above credit scores accounted for 38% of loans issued during the second quarter of 2008, compared with just 23% two years earlier. Those with low credit scores of 650 or less represented only 15% of loans during the first three months of 2008, compared with 28% during the first quarter of 2006.