We all remember the Bell Curve from our school days, right? A few people get A's, more get B's, the majority get C's (highest part of the curve), it goes lower again with D's and finally (hopefully) the lowest number of people receive F's.
I think we should look at the number of home loans graphed against interest rates pretty much the same way - actual loans as well as availability of loans. Really high interest rates and we have a low number of loans becuase consumers don't want to be tied in to 30 years of unmanageable interest payments. Really low interest rates creates a low number of loans on the other end of the bell curve. Why? Because banks don't want to be tied in to receiving low interest income for 30 years. "In the middle rates" is where the lenders and borrowers come to agreement, hence the 
most loans being available AND agreed to.
SO...if loans are not being offered by the banks now because interest rates are so low, why on earth do we think that if the Fed lowers rates even more, banks will finally start lending again? As of October 6th, the news says with the new .1% drop you can now get a 3.9% 30 year mortgage. Don't bother to run to your bank and actually try and get that loan though.
I know, I know - those big, bad banks trying to make a buck... but we forget that banks are businesses. They have overhead (rent, electricity) and employees to pay. So if they know that a large portion of their money being tied up for 30 years making only 4% interest will not allow thm to pay their bills, pay thier employees and stay in business...they hold out on mortgages and they find other ways to make money and stay in business. (And keep people employed.)
Forgive me for the elementary econimics lesson, I'm almost done - but htis is important. It's wher eyou come in!
Banks as just like the grocery store, like an architect or a landscaper or an artist. They offer a product or a service that we choose either to buy or not to buy. The business sets a price they can survive and make a profit with, the consumer decides if they think the product or service is worth that price. You either buy or you don't buy. If enough people don't buy, then the business doesn't make money at that price. They will either have to lower their prices, change thier products offering or business plan, or eventuallygo out of business.
When one big bank started charging new fees for using a debit card there was alot of uproar. But did people act on that anger, or just complain. We are such a fatalistic country for a country that is so set on success. "One bank does it and all the rest will follow. There's nothing we can do. So I guess I'll stay with the bank and pay through the nose."
If the price isn't worth the service (of having an account, having a debit card, or using a credit card) then people need to let the banks know. How? Don't use the debit card or credit card (such torture I know). Or go in and talk to the bank's customer service staff. Many banks will waive monthly fees if you have three services with them. Or you can change banks. Yes, you have that choice.
You could also decide that the service you recieve is worth the price. A valid choice for many, but not all. (Before changing banks, see my blog called "Changing Banks is a Process - Take it Slow")
Here's some good news - capitalism is alive and well (and not a dirty word, by the way.) Within three days of the news of the fee for debit card use I saw a community bank advertising how they don't pick your pockets. They are poised and ready to pick up the slack when people start leaving the big banks, searching for banks with better terms.
Don't beleive it when the media tells you banking is an oligarchy - that a few banks make all the decisions. You have choices. Those choices may not have an ATM on every corner or a commercial on every tv station, but you do have choices. Community banks, credit unions, your mattress. Debit cards, credit cards, paying cash. Staying in your current house (even if you are under water - a roof over your head is a good thing), renting, buying a foreclosure (and putting some work into it).
Don't get me wrong I know there is a problem. I also know people who have tried to refinance have felt they either wasted a whole lot of time for very little decrease in payments - or they didn't qualify. But if it's worth it to you, you will do the research to find out what its best for you.
Be a good consumer. "Vote" with your money, so to speak. Whether you are buying a hamburger or a checking account - let the businesses know what it is worth it to you and at what price. Also, be a good citizen. After you've complained to your freinds write your congressman or congresswoman!
Below is a response from a public servant I like. Now let's just hope people and banks can come to agreement on a good old-fashioned bell curve. Strive for a "C" grade people. Agreement! and something we can all live with.
David Schweikert - District 5 Representativeof Arizona
Helping Homeowners Event - Click here for information and Invitation
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