Think mortgage rates are low? They are about to plunge from the record low of 3.94 percent, recorded just yesterday in Bankrate's weekly index. I thought it was impossible, too, but it seems like the European debt crisis will make mortgage borrowers in the United States very happy today.
Investors seem to think U.S. debt is the safest investment in the world right now. And because of that, the yield on the 10-year Treasury tumbled from an already low 1.68 percent to a record low of 1.55 percent Thursday morning. The higher the demand for Treasury bonds, the lower the yield, or rate of return. Mortgage rates normally follow the same direction as Treasury bonds. That doesn’t always happen, but it's happening today.
"Yes, rates are following right along," says Brett Sinnott of CMG Mortgage Group in San Ramon, Calif. "We are seeing all-time lows and with the continued trouble in Europe, it looks as though we will remain this way for the near term."
Freddie Mac 's required net yield, which is another indicator of where rates are headed, also tumbled Thursday morning to 3.08 percent from 3.23 percent on Wednesday afternoon.
Sinnott says the 30-year-fixed rate has reached as low as 3.5 today and the 15-year fixed rate as low as 2.75 percent.
"Many (including myself) thought that the Greece-Spain troubles had been completely built into the market, but it seems as though it was not," he says.
How long will the low rates last? It's impossible to say. I wouldn't take a chance if I were you. But don't lose sleep if you're not ready to get a mortgage or refinance yet. Although there is no guarantee, it looks like the low rates may stick around for a little while. Maybe.
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