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Mortgage rates have dropped 0.35 percentage points over the past three weeks. First, the Federal Reserve's September announcement that it will not reduce its pace of purchasing mortgage-backed securities and Treasury bonds resulted in drop from 4.57% to 4.32% 30-year fixed mortgage rate, according to Freddie Mac. However, since the recent partial government shutdown, mortgage rates have dropped even lower to from 4.32% to 4.22% (the lowest since June). Some of the main reasons in this latest drop in rates is the decline of consumer confidence and the onset of the government shutdown, according to Frank Nothaft, Freddie Mac's chief economist. This is great news for mortgage borrowers and prospective buyers, as they are encouraged to take advantage of the recent decline.  For one, prime borrowers can lock down on a 4.22% mortgage rate, and 2. For anyone who bought a home in June or July could potentially refinance at today's rates, which would ultimately save them more money. Calculate what your monthly mortgage would be Yahoo! Finance provides an example of how advantageous this time can be to lock down on the current rate. Borrowers applying for $200,000 loans with the current rate of 4.22% could save them $42/month, a total of $500 a year. If, however, they can get a mortgage.  On the other hand, this is not so great for mortgage lenders:  "While this is great news for mortgage shoppers, what's not great is that it comes as the government has ground to a halt, making it hard for mortgage lenders to get verification of tax returns or even Social Security numbers," said Keith Gumbinger, vice president of HSH.com, a mortgage information firm. "This is likely to slow the loan approval process." Mortgage rates may continue to drop even further, as it would be more reason for the Feds to hold off on tapering.

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Jim DeRentis
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