The one positive in all the uncertainty surrounding the nation’s debt was a plunge in Treasury yields, which in turn sent mortgage rates to record lows.

The 30 year fixed hit a near-low of 4.45 percent last week from 4.57 percent, and the 15 year made a new low of 3.52 percent, according to the Mortgage Bankers Association. Those low rates pushed refinance applications up 7.8 percent and purchase applications up 5.2 percent (both seasonally adjusted).

So are we housing geeks now jumping for joy? All good? Maybe not so much.

“Refinance application volume increased, but even though 30-year mortgage rates are back below 4.5 percent, the refinance index is still almost 30 percent below last year’s level. Factors such as negative equity and a weak job market continue to constrain borrowers,” notes the MBA’s VP of research and economics, Michael Fratantoni. “Purchase activity increased off of a low base, returning to levels of one month ago, but remains weak by historical standards.”

So even ridiculously low rates are not exactly boosting the housing recovery; that’s because rates have been historically low for a while.

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Andrew and Peggy Sheren can’t resist a good deal, especially when it comes to financing their McLean, Virginia home.

“We’ve gone from an interest rate from something like greater than 6 percent down to the lowest interest rate we currently have is three and an eighth percent,” Andrew remembers. They have refinanced their home four times in four years, taking equity out only the first time for a renovation, but essentially cutting their interest rate in half.

Negative economic reports of late have pushed the rate on the popular 30 year fixed to below 4.5 percent, the lowest this year and just about a quarter percent off the 50-year lows we saw last summer; adjustable-rate products are even lower. When investors see bad economic news, they pull money out of the stock market and park it in bonds. The price of bonds goes up, the yield goes down, and mortgage rates follow down.

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The hallmark of the American labor market, and consequently the wider economy, has long been the mobility of our work force.

From “going West” to “teleworking,” we go where the jobs are.

Unfortunately the uniquely disastrous state of the current housing market is changing all that.

One in four homeowners with a mortgage are now “underwater” on that mortgage; their home is worth less than their debt.

“Mobility deteriorates when you’re under water because you can’t get out from under the house without bringing money to the table,” says Mark Fleming, chief economist at CoreLogic. “So, it reduces mobility, which has an impact on the labor markets and the efficiency of labor markets in terms of people finding new jobs and people moving to where the jobs are located.”

Some borrowers, in good markets, can afford to rent out their homes and move to the new location. If the rent covers the mortgage payment, they can afford it, and many are doing just that. The trouble is, the bulk of those looking for new jobs are unemployed and likely behind on their mortgage payments already. For them, renting is probably not an option. Their last resort would be a short sale, where they negotiate with the bank to let them sell for less than the value of the loan, with the bank taking the hit.

That’s not as easy as it sounds.

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