I'm Lucas Wysocki with your weekly look at mortgage rates. Fears of the looming fiscal cliff caused mortgage rates to drop this week. The average interest rate on a 30-year fixed rate loan fell 2 basis points to 3.5%. The 15-year fixed rate is also down, falling to 2.85% and the 3-year jumbo fell 2 basis points, coming in at 3.98%
On the adjustable side, the 5/1 adjustable-rate mortgage sat still at 2.74 percent.
If we fall off the fiscal cliff, it will have an immediate and long-lasting impact on the financial sector. Just the threat of that is enough to scare investors into parking their money in safe-haven U.S. government bonds. Bonds are closely related to the interest rate on mortgages. So, until the fiscal cliff is resolved, we can expect mortgage rates to remain at or near record lows.
Now, just because interest rates are at record lows, doesn't mean you should settle for average. To shop around for the very best interest rate, use the free search engine at Bankrate.com.