At the worst of Thursday, the lowest-fee, 30-year fixed-rate mortgages touched 6.25 percent (yes, that’s a “six”).

The jump is a technical affair likely to reverse, and certainly not a sign of economic recovery. Long-term rates had been in the same place for four weeks, with the bond market running out of buyers at near-record lows and overdue for counter-move. All credit markets are clogged (another portion, the $360 billion “auction-rate securities” market locked-up altogether this week), and even government agency mortgages are difficult to distribute.

Not much in new data, all poor: the NFIB small-business survey fell to recession, as did the New York “Empire” index; January industrial production was flat, and the University of Michigan index of consumer confidence this week fell to 69.4, a 16-year low.

The top show: Valentine’s Day in Congress. Securities and Exchange Commission Chairman Christopher Cox, Treasury Secretary Henry Paulson, and Federal Reserve Chairman Ben Bernanke.

There was no massacre, but some slapping around. Sen. Robert Casey (D-Pa.) said: “Mr. Bernanke, let me give you a heads-up. The next time you see something coming, you do something about it. You’re a year-and-a-half behind this housing thing.”

I expect that’s the first time in Bernanke’s working life that anyone has spoken to him that way.

Cox had the grace to look worried throughout. Good idea. Wore his lucky socks and necktie.

Paulson repeated his sole concept: “Losses should be identified and written down. Those institutions that need capital should raise it.”

Everybody wants market-based solutions, but what to do with a market too badly broken to heal itself? The first test of inventive government intervention will come in the next two weeks. If we get an effective bailout of the bond insurers, MBIA and Ambac, the market relief may cause our rates to rise, but it will be worth it. 

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

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