Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:

"There are two reasons for the significant drop in interest rates, and both those reasons come from our Federal Reserve. First is a decision recently by the Federal Reserve to buy mortgages held in what's called the secondary mortgage market, where companies buy up existing mortgages. These mortgages have been held by the giants Fannie Mae and Freddie Mac. And of course, if you've paid attention to the news, you know those two organizations have had financial trouble, and initially that meant that risks among mortgages were viewed as being high. Now that the Federal Reserve comes in and says, 'We're going to buy up those mortgages,' that means risk viewed by lenders in mortgage market has gone done. Translated, that means the interest rate has gone down. So that's one source. The other source is very simple, the Federal Reserve has dramatically increased the amount of money out there to loan. The Federal Reserve does control the money supply. Recently they've been increasing it at an 8 percent annual rate. That's double the rate of a couple of years ago. So the simple reason is that lenders have more money to loan. More money means that the cost of those loans (the interest rate) can fall."