MASON CITY — The current economic slump has a positive by-product: Lower interest rates on home mortgages.Local banks report increased customer interest in new home loans and the refinancing of existing mortgages as rates fluctuate just under 6 percent and, in some cases, under 5 percent."In an average month, I might have three refinances going," said Pat Thompson, mortgage banker at Farmers State Bank in Mason City. "This month I have 15. All of a sudden, things got a little wacky."He added that rates have fluctuated up and down as much as a half percent since January "when for so many months before that, they were at 6.25, with as little swing as an eighth."A 30-year fixed rate mortgage at local banks on Tuesday ranged somewhere between 5.75 percent and 5.85 percent while 15-year fixed rates came in just over 5 percent.Mortgage banker Diane Froning of Commercial National Bank agreed that inquiries about rates have increased.Froning said she has seen about a 50-50 split between patrons who want to simply drop their interest rate and those who want to consolidate debt into a new loan.She cautioned, however, that a new loan may not be justified, despite the low current rates."If it is the matter of one percent, it just may not be in your best interest to pay the costs associated with a refinance," she said, referring to legal and closing fees.

Mortgage Rates Still Cling To 6% Despite Easier Credit

Mortgage rates remained near 6% this week--and are even up slightly from the previous week--despite Federal Reserve efforts to push interest rates lower.

A 30-year fixed-rate mortgage currently costs 5.68 percent, slightly above the 5.66 percent a week ago, according to Bankrate.com. The rate has fallen a bit, though, since hitting 5.74 percent just before the Fed announced a three-quarter-point rate cut last Tuesday.

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Cleveland Fed chief lays out U.S. financial problems

The housing boom and bust, changes in the structure of the mortgage markets and the role of highly leveraged financial institutions have all added to the current financial turmoil the U.S. is facing, said Sandra Pianalto, president and chief executive officer of the Federal Reserve Bank of Cleveland.

Pianalto said the housing boom and bust is not unusual at a local or regional level. For example, in the early 1990's, Massachusetts and California saw foreclosure rates rise and remain high while housing prices fell for several years.