U.S. Mortgage Rates
The massive $26 billion mortgage settlement between states and banks is designed to help millions of American homeowners -- but not everyone is eligible. REUTERS

The average 30-year fixed mortgage rate fell below 4 percent for the first time in history to 3.94 percent.

Freddie Mac's weekly Primary Mortgage Market Survey released Thursday also reported the rate for a 15-year fixed mortgage rate has fallen to 3.26 percent, a record low for the sixth consecutive week. In order to calculate the average rate, Freddie Mac surveys lenders from Monday to Wednesday each week.

This could be good news to those who are looking to buy or refinance a home. However, banks have tightened their lending standards to prospective homebuyers-they are expecting higher credit scores and, for first time homebuyers, many banks are looking at a 20 percent down payment.

Of course, it may be difficult for home buyers to meet the qualification standards enacted by banks. The national unemployment rate stuck above 9 percent. After joblessness and pay cuts, many people have significantly lower credit scores than they did prior to the recession. Many Americans are underwater on their mortgages, meaning that they owe more than their house is worth.

Furthermore, a homeowner must pay closing costs to refinance, which costs 0.8 percent of the original loan, on average. This will discourage many homeowners from refinancing in hopes that rates will continue to decline.

The national mood has gone sour on the housing market despite low interest rates. According to Fannie Mae's August 2011 national consumer survey, 78 percent of Americans believe the economy is moving in the wrong direction. Twenty-seven percent believe home prices will continue to fall, and 22 percent expect their financial situation to worsen over the coming year.

A report put out late September by the Commerce Department shows that sales of single-family homes in August were at a seasonally adjusted rate of 295,000 annually, down from 302,000 in July but up from 278,000 in August of 2010.

Write to Samuel Weigley at s.weigley@ibtimes.com