Written by Robert Fetten of  DE | Capital Mortgage

Due to the debt ceiling debate and the general lack of economic growth for the second quarter of 2011, the mortgage rates have decreased 50 basis points in the past 3 weeks.

This equates to .5% reduction in 30 year mortgage pricing for new home buyers and people looking to refinance.

 In New York City, the average loan amount applied for is approximately $500,000.  Based on this average, the savings to the consumer runs over $50,000 in interest when rates drop so quickly.

 During the real estate market between 2001–2007, condo and co-op prices consistently went up as rates went down.  They key benefit in today’s market is that when the rates drop so fast and dramatically, the housing prices and market are not able to adjust to compensate for the change in monthly housing costs.

 A typical example is when a condominium looking for a $950,000 sales price when rates are 5% is not the same as a condo looking for $950,000 when rates are 4.5%.  The buyer who can make the deal when rates have dropped to 4.5%, and still paying the seller $950,000 is really saving $50,000 in overall costs, and the seller does not know it.  Compound this scenario with strong negotiating on sales price, and the savings can be enormous.

 Squabbling over petty negotiations of less than $20,000 when rates have dropped .5%, makes little sense.  A buyer has the opportunity to make up that $20,000+ in the drop in rates.

 We are in a special time, right now, as summer comes to its mid-point.  The asking price for a property in June, is NOT the same as the same asking price in August – because of the lower interest rates.

 Buyers who are tuned to the mortgage market and have the security of being able to rely on a mortgage banker to help them navigate, can save themselves thousands.  Also, losing a bid on a property they want due to sales price becomes