By STEVE EIGHINGER
Herald-Whig Staff Writer

Earlier this year, it appeared the days of record low rates for those 30-year home loans were a thing of the past.

Wrong.

In the past three months, the average rate for a 30-year fixed loan has continued to inch downward, reaching a national average of 4.57 percent last week, according to Freddie Mac. That was the lowest since the mortgage company began keeping records in 1971, and that figure remained unchanged as of this morning.

In Quincy, the rate is around 4.5 percent.

Art Greenbank, president and CEO of First Bankers Trust in Quincy, said locally he has started to see added interest in the areas of home buying and refinancing.

"I would not call it a rush, but there is (more interest) and our people are busy," he said.

Greenbank said this type of fluctuation is tied to a weak economy and a real estate market that, generally speaking, remains in "chaos."

"Around here, though, the real estate market is not bad, just a little weak," he said.

Refinancing drove total U.S. mortgage applications to a nine-month high last week, while demand for loans to buy homes sunk to a near 13-year low after the expiration of federal tax credits.

The Mortgage Bankers Association said refinancing requests jumped 9.2 percent in the week ending July 2, the highest level since May 2009. But demand for mortgages to buy homes slipped 2 percent. It was the eighth weekly drop in the nine weeks since the federal tax credits for homebuyers expired on April 30.

Refinancings accounted for 78.7 percent of all applications last week, the highest share since April 2009, the MBA reported.

"We're seeing a steady stream (of homeowners) coming in to refinance," said Mike Mahair, president of State Street Bank in Quincy. "It's probably the most since January and February in 2009."

Mahair said he has also noticed another trend.

"We are seeing people trying to shorten the term of their home loans when they refinance, going from 30 years to 20 years, or from 20 years to 15 years in an effort to save more (in interest)," he said. "I'd say we are seeing that in 75 percent of the refinancings."

It was only back in April when mortgage rates were climbing upward -- the sign of a stronger economy -- that the days of the record low rates were thought to be a thing of the past. Some analysts were predicting 6 percent mortgage rates by early 2011, but the up-and-down recovery from the two-year recession will likely see the economy flatten out on occasion, and this is one of those periods.

"Bad economic news tends to bring lower mortgage rates," Mahair said. "A lot of areas are still experiencing high unemployment rates, although we've been fortunate in Quincy and Adams County. Our local economy has fared pretty well and our loan requests remain strong."

Nationally, the lowering of mortgage rates has not stemmed the tide of Americans losing their homes to foreclosure. More than 1 million American households are likely to lose their homes this year, as lenders work their way through a huge backlog of borrowers who have fallen behind on their loans.

Nearly 528,000 homes were taken over by lenders in the first six months of the year, a rate that is on track to eclipse the more than 900,000 homes repossessed in 2009, according to data released Thursday by RealtyTrac Inc., a foreclosure listing service. By comparison, lenders have historically taken over about 100,000 homes a year.

The surge in home repossessions reflects the dynamic of a foreclosure crisis that has shown signs of leveling off in recent months, but remains a crippling drag on the housing market.

The number of households facing foreclosure in the first half of the year climbed 8 percent versus the same period last year, but dropped 5 percent from the last six months of 2009, according to RealtyTrac, which tracks notices for defaults, scheduled home auctions and home repossessions.

In all, about 1.7 million homeowners received a foreclosure-related warning between January and June. That translates to one in 78 U.S. homes.

The Associated Press contributed to this story.

-- seighinger@whig.com/221-3377