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Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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Real Estate Market Trends: Falling Mortgage Rates Could Shore Up Housing Recovery

Looking for a silver lining in the federal government shutdown? For homebuyers or homeowners, look no further than falling mortgage rates.

| BY Donald Liebenson

Looking for a silver lining in the federal government shutdown? For homebuyers or homeowners, look no further than falling mortgage rates.

Amidst escalating uncertainty as the political stalemate enters its third day with no reported progress and a debt ceiling battle to come, a 30-year fixed-rate mortgage averaged 4.22 percent in the week ending Oct. 3, Freddie Mac announced Thursday. This is down from 4.32 percent last week and is the lowest level since the week ending June 20, 2013. A 15-year fixed-rate mortgage fell to 3.29 percent from 3.37 percent.

"With the onset of the federal government shutdown and declining consumer confidence, fixed mortgage rates fell for the third consecutive week,” observed Frank Nothaft, vice president and chief economist, Freddie Mac, in a statement. Consumer sentiment fell for the second month in a row in September to its lowest reading since April, according to the University of Michigan. Moreover, a recent Bloomberg survey of professional forecasters suggests that a partial federal shutdown lasting one week would shave 0.1 percentage points off of GDP growth in the fourth quarter and even more if the shutdown lasts longer."

This reverses a recent real estate market trend that saw mortgage rates at their highest levels in a year last summer, the result of an improving economy and speculation that the Federal Reserve was to taper back its stimulus program known as quantitative easing (the plan remains in place for now). Pending home sales slowed in August, with tight inventory conditions, higher interest rates, rising home prices and continuing restrictive mortgage credit impacting the market, according to the National Association of Realtors.

Interest rates are the rate at which borrowers are charged for the use of money. QE3, the most recent incarnation, is the primary factor in the historically low interest rates that help make housing more affordable for qualified home buyers as well as owners who wish to refinance to take advantage of the low rates.

For homeowners, rising interest rates may take the incentive out of refinancing by reducing the money they might save by paying off their former mortgage with a new and lower rate. Lower interest rates, in turn, leave homebuyers and home owners with more discretionary income.

About the Author

Donald Liebenson

Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.  

A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.