Mortgage rates hovering by record lowsAlthough mortgage rates ticked higher in the most recent weekly data, levels remain near record lows, according to Freddie Mac. The 30-year fixed-rate mortgage average rose to 3.40% in the week ending Jan. 10 from 3.34% in the prior week, compared with a record low of 3.31% that was set in November, according to the most recent weekly data. As the Federal Reserve continues to support low rates, analysts expect average 30-year mortgage rates to remain well below 4% throughout 2013.– Ruth Mantell Read more about interest rates.Housing affordability on track to set record Record low interest rates, along with low prices, are making housing more affordable than ever, according to analysts. A barometer released this week showed that housing affordability is expected to set a record in 2012, according to data from the National Association of Realtors. The trade association is forecasting that its index of housing affordability will hit a record level of 194 in 2012, up from 186 in 2011, when the prior record was reached. Data go back to 1970. A reading of 100 means that a household with median income would have exactly enough income to qualify for buying a median-priced existing single-family home. A level of 194 for last year means that families had almost double the income needed for buying a median-priced existing single-family home. However, skeptics might note that NAR’s index didn’t fall below 100 even during the recent bubble. Indeed, the last time the index reached under 100 was in 1985, when mortgage rates were in double digits.Read more about affordability.Rising credit scores for Freddie, Fannie loansDespite record affordability, economists, including Federal Reserve Chairman Ben Bernanke, have been concerned that overly tight credit standards have prevented many buyers from participating in the housing market. Indeed, credit scores for loans purchased by Fannie Mae and Freddie Mac started rising in 2008 and remain relatively high. In the third quarter, the weighted average credit score of single-family mortgages purchased by Fannie reached 761, while the score was 762 for Freddie-acquired loans. Those levels are up from the 730s in 2008. Looking to increase lenders’ willingness to make loans, federal regulators unveiled new rules this week to clean up the mortgage marketplace while offering legal protections to lenders when loans go bad.Read more about new mortgage rules.Debt-to-income ratios fallingWhile credit-score standards have increased post-bubble, debt-to-income ratios have been falling. For home-purchase loans, the weighted average debt-to-income ratio at the time of origination is currently around 34%, down from a bubble high of about 40%. “The average debt-to-income ratios are back to basically the early 2000 levels for reasonable, sustainable mortgage payments,” said Mark Fleming, chief economist for analysis firm CoreLogic. “Apart from credit scores maybe being a little bit too tight, all of the other aspects of the traditional metrics on which you underwrite mortgage loans are really back to reasonable and tried and true levels.” Still, there are concerns that first-time home buyers who have trouble with a down payment are falling through the cracks. The new rules on so-called qualified mortgages are restricted to those loans with a debt-to-income ratio no greater than 43% — over the last two years, about 14% of mortgages didn’t meet that standard, according to the American Bankers Association.Denial rates for mortgages are downInterestingly, denial rates for mortgages are down, according to Federal Reserve analysis of data provided under the Home Mortgage Disclosure Act. The denial rate for owner-occupied conventional first-lien home-purchase loans in 2011 was 14.8%, compared with a recent peak of 19% in 2007, according to the Fed. How does that trend jibe with concerns about overly tight standards? “The pool of borrowers changes over time. It is not always obvious how it affects denial rates. It is likely now only well-qualified folks apply. In the subprime period a much weaker pool of borrowers applied, maybe more than once,” according to one Fed economist. Fleming, the chief economist at CoreLogic, said that while denial rates are within normal levels, there are potential borrowers who probably aren’t bothering to apply. “Maybe there are a whole pile of people who figured it out, and know that there is no point in coming forward for a loan. But that’s a lot different than the banks not being willing to lend,” Fleming said.