With the financial news headlines getting dominated by geopolitical events, stock market spurts and pauses, and comments on the economy coming from the Federal Reserve, not nearly enough attention has been focused on this year’s dip in mortgage rates.

In fact, the dip in mortgage rates this year is particularly intriguing since it has taken place while the Fed has orchestrated a significant reduction in mortgage and Treasury bond buying in an effort to cut back on monetary stimulus, employment has slowly but steadily improved, and lending activities by the nation’s banks has expanded.  An added ingredient to the simmering stew that should lead to rising interest rates and not lower rates is inflation and the concerns that consumer costs are starting to rise whether or not the official government figures are reflecting this phenomenon.

In light of these events, the average 30 year mortgage rate available at the nation’s leading bank mortgage lenders has dropped from 4.704% at the start of 2014 to just over 4.00% by the middle of August.  This is a rate reduction of almost three quarters of a percent as the economy expands and the Fed hits the break puts on monetary easing.  Based on the most recent survey of the largest bank mortgage lenders conducted by SelectCDrates.com, the average 30 year mortgage rate for the week ending August 22, 2014 came in at 4.188%.

The interest rate drop on the 30 year loan equates to a monthly mortgage payment reduction in excess of $75.00 for a home loan amount of $260,000.00.  Excluding costs for taxes and insurance, the recent mortgage rate reduction results in a monthly mortgage payment change of $79.46.

New home loan borrowers can save more for larger loan amounts and can obtain even lower mortgage rates for shorter term home loans such as the 15 year mortgage.  Jumbo mortgage rates have dropped to 4.078% in the current mortgage survey while 15 year mortgage rates have slid to 3.386% from 3.799% at the start of the year.

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