Home shoppers rush in as interest rates fall

Telephones are ringing — and ringing — at mortgage brokers' offices around the country after this week's sharp drop in mortgage rates.

Average rates on 30-year fixed-rate mortgages fell to 5.97%, down from 6.33% the week before, according to Bankrate.com. Some brokers report rates as low as 5.25%.

Borrowers with a $200,000 loan, for example, would save about $63 a month if their interest rate dropped to 5.5% from 6%.

Credit the Federal Reserve's announcement this week that it will buy $500 billion in mortgage-backed securities held by Fannie Mae and Freddie Mac, helping the two mortgage-finance giants increase the pool of money available to banks and other lenders to make new mortgages.

"It is pretty remarkable stuff," says Bob Walters, the chief economist at Quicken Loans, where applications quadrupled Tuesday from Monday.

View full article at USA Today.