The experts keep getting it wrong. While both career and closet economists, yours truly included, predicted a gradual increase in mortgage rates over the course of the year, the opposite has happened. First it was the debt crisis in Europe that led overseas investors to buy U.S. Treasuries, now it is an unexpected slowdown in housing that has economists worried about a double-dip recession.

Fixed rates mortgages hit an all time low last week with the Freddie Mac PMMI index showing 30-year fixed rates dropping to 4.69%, and 15-year fixed rates dropping to 4.13% for the week ending June 24^th. Both benchmarks were down roughly .07% from the previous week. Last year at this time rates stood at 5.42% for the 30-year, and 4.87% for the 15-year. Even one-year adjustable rate loans are at their lowest levels since 2004. Mortgage rates in the Houston metro area were running approximately .10% lower than the national average according to Bankrate.com.

The unexpected rate drop we have seen over the course of the last three weeks has presented a unique opportunity for home buyers. Many buyers who were shut out of the first-time and repeat homebuyer tax credit this Spring due to the stringent qualifying criteria can now still save significant funds due to the drop in rate. A home buyer who locks in a 30-year fixed rate of 4.375% instead of 4.875% would see a modest decrease in their principal and interest payment of around $60, however the total interest saved over the life of this loan would amount to more than $21,500. Housing affordability, already at or near historic highs, is expected to set a new record when the latest data is released.

Even existing homeowners who have already refinanced can benefit from this drop in mortgage rates. Conventional wisdom dictates that it takes at least a 1% decrease in mortgage rates to offset the costs involved in refinancing. However, an analysis of a drop in rate from 5% to 4.375% for a borrower who obtained a $200,000 loan just one year ago, would breakeven in about 5½ years assuming $6,000 in closing costs. The breakeven point drops even more as the loan amount increases, so those homeowners with jumbo loans (above $417,000) should take particular notice of where rates are now relative to when their loan was originated.

Obtaining a mortgage today is certainly not as easy as it once was. Fewer lenders, strict credit and documentation requirements, and increased regulatory scrutiny have combined to limit credit to only those most qualified borrowers. Nevertheless, a homeowner with 20% equity in their home can qualify to refinance with credit scores down to roughly 620. This is also the magic minimum credit score for most of the FHA and VA loans first time homebuyers tend to utilize. In 2009, the average credit score in America was 692, according to Experian.

So, is now the time the refinance? Is this the best time to lock in your loan? Will there we another shoe that drops to push rates even lower? Maybe. I suppose the question you need to ask yourself, in the immortal words of Clint Eastwood, is “Do I feel lucky?”