One of the more alarming trends right now in the area of home mortgage loans is how expensive and scarce they are becoming. Mortgage lenders, burned by the era of easy mortgage financing and subprime mortgage loans, are being more selective of whom they lend to.

And they are charging more in mortgage interest rates.

Because of the tightening of the credit market, the dramatic drop in home values, and the difficulty in finding buyers and investors for home mortgage loans, the costs of borrowing are on the rise. The flap with Fannie Mae and Freddie Mac isn’t helping things, either.

CNN Money reports on one of the factors in the rising cost of home mortgage loans:

Fannie and Freddie borrow money in the bond markets to pay for the
mortgages they buy from lenders and then sell them to hedge funds and
other investors. Their cost of borrowing that money has now gone up,
and that filters down to lenders who have to charge more to borrowers.

"It
does have an impact on mortgage interest rates," said Richard DeKaser,
chief economist for National City Corp. "It will be more expensive for
Fannie and Freddie to acquire mortgages and that will ripple through
the market."