Interest rates for 15- and 30-year fixed mortgages continue to stay low, reports CNN Money. Last year, the 15-year fixed rate averaged 3.07 percent, but last week, it dipped to 2.56 percent. The 30-year fixed rate averaged 3.35 percent, which is only a 0.04 percentage point above the record low of November 12, 2012.

These interest rates help both potential homebuyers and existing homeowners. Competitive rates help drive consumer demand for houses and increase prices. Over the last 12 months, the S&P/Case-Shiller home price index measured a 9 percent gain in residential property prices, enabling underwater homeowners to regain some of their lost equity.

Mortgage refinance applications have gone up. Last week, they jumped by 1.8 percent, according to the Mortgage Bankers Association, and accounted for nearly three-quarters of all home loan applications. HARP’s share of refinance applications was 34 percent last week, marking a high point since the MBA started tracking such applications in February 2012.

As of May 1, 2013, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.60 percent, the lowest since December 2012′s rate of 3.65 percent. The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.84 percent, the lowest rate since December 2012′s rate of 2.89 percent.

The Home Affordable Refinance Program (HARP) underwent some significant changes in 2012, evolving into HARP 2.0 and spurring a surge in refinances under the government-run program. Based on the Federal Housing Finance Agency’s (FHFA) 2012 report, HARP volume represented 22 percent of the total refinance volume in the fourth quarter. Additionally, 1,074,755 refinances were completed through HARP in 2012, bringing the total number of HARP refinances to over 2.1 million since the program’s inception.

So what specific changes attributed to the growth in HARP refinances? HARP 2.0 gives better access to borrowers who are at risk of losing their homes, particularly those who are severely underwater, reports Ilyce Glink of CBS MoneyWatch. Meg Burns, senior associate director for housing and regulatory policy for the FHFA, wrote in an email that “removing the 125 percent loan-to-value ceiling, waiving certain representations and warranties for lenders, eliminating the need for a new property appraisal and eliminating certain risk-based fees for borrowers who refinance into shorter-term mortgages has proven successful.”

According to CBS MoneyWatch, HARP 2.0 appeals to more lenders in part because the program does not hold the new originator responsible for anything that occurred with the first loan. “The limited success of HARP 1.0 can be attributed to a lack of lenders that embraced the program,” said Spencer Llewellyn, executive director of Loans 101, a company that provides data to the public about the mortgage industry.

As a result of the revamp, the market has seen a 600 percent annual increase in the number of underwater homeowners who received HARP loans.To find out what HARP 2.0 can do for you, check out www.makinghomeaffordable.gov.

Historically low mortgage interest rates and relatively low housing prices have created a real win-win situation for home buyers. But some would-be buyers have run into credit challenges with stricter lending standards. That could be changing, based on the quarterly FICO/PRMIA survey that measures the sentiment of lending among bank risk professionals, according to the Niche Report.

The survey shows that about 20 percent of the bank risk professionals questioned expect the approval criteria for loans to relax. That’s up from 12.1 percent in the prior quarter. The Professional Risk Managers’ International Association (PRMIA) conducted the survey for FICO, posting the following results:

• 71 percent of respondents say home prices are “rising at a sustainable pace” in the context of mortgage lending risk
• 39 percent of respondents expect mortgage delinquencies to decrease over the next six months
• 59 percent of bankers expect the supply of credit for residential mortgages to meet demand over the next 6 months.

Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs, said that while “mortgage lenders have been understandably guarded over the past five years…the improvement in their sentiment should be welcome news.” Jennings anticipates that more lenders will expand their mortgage and home equity businesses, but they will proceed with caution. This is a positive forecast for potential buyers with less than stellar credentials who can still demonstrate their financial ability to support a mortgage.