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What's the bright side to a 200 point drop in the Dow? Yet another rush to Treasuries that pushes the 10-year yield below two percent; that, in turn, means even lower mortgage rates, right?

Maybe not this time.

Mortgage rates are already hovering near historic lows, with the 30-year-fixed heading toward four percent, but unlike home prices, experts tell me mortgage rates do have a bottom...a bank-imposed bottom.

Why?

"Because they [banks] don't have to go lower on the rates to get business and because they make more money if they don't go to the lower market rate," says Guy Cecala of Inside Mortgage Finance. "It's also a way to manage a potential flood of refi calls."

Craig Strent over at Apex Home Loans agrees: "I think part of the reason they are not going lower is because lenders are already inundated with refi applications and cannot handle another tidal wave."

The refinance share of mortgage applications was hovering around 80 percent a few weeks ago, but fell to 78 percent last week, even despite low interest rates. Those who can refi to their advantage, largely already have. Far too many borrowers are too far underwater on their mortgages to qualify for a refi.

Still, seeing rates go under that emotional 4 percent will push more borrowers to apply for refi's. Unfortunately low interest rates have not spurred home buying, and that's why the big banks are in no hurry to entice with even lower rates.

"Lenders would much prefer home purchase loans, which have a much lower fallout rate than refi's," says Cecala.

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