As the Chicago Tribune reports, many large mortgage brokers went out of business during the subprime-lending bubble burst because they could no longer find investors to buy their loans and fund their operations.  Today, the pool of mortgage lenders is much smaller than it was in the past and billions of dollars in liquidity have disappeared.

Additionally, the remaining lenders are gun-shy about rising delinquencies and foreclosures that have forced many to take large write-offs.

Diane Swonk, chief economist with Mesirow Financial in Chicago, told the Chicago Tribune that "Time heals all wounds, and we haven't had enough time yet to heal this wound . . . Banks and other lenders are being more conservative. They're saying, 'I need to be compensated for this risk.' "

The current economy has a significant effect on mortgage rates.  If the U.S. economy has narrowly avoided a recession, the Federal Reserve will probably not lower interest rates further and, in fact, could start raising them again as soon as October, according to the Chicago Tribune.

"With commodity prices rising, especially for oil and food, the Fed may have little choice but to tighten credit to slow inflation, which eats away at the value of wages as well as financial assets, economists say.

When inflation goes on a tear, investors want higher premiums for lending money, which translates into higher long-term interest rates."