Borrowers who thought they’d seen the last of 30-year fixed mortgages with interest rates below 4% got a pleasant surprise this week, as stock market selloffs, fears of another world-wide economic slowdown, and perhaps an Ebola scare helped drive down mortgage rates to their lowest levels in more than a year. Interest rates on the 10-year Treasury note have fallen to 2.55%, down from 2.61% a week ago, leading to some 30-year fixed mortgages dipping below 3.99% for the first time since June 2013, according to Bankrate.com.
“We have seen a flurry of activity in the last 24 to 48 hours,” said Mark Livingstone, a mortgage broker at Cornerstone First Financial in Washington, D.C., who said the sharp fall in Treasurys has potential borrowers heading back into the market. “Everything has come down and we’re expecting it to come down a little bit more,” he said.
A “parade of horribles” has driven down Treasury yields amid an equity market selloff, says Mike Fratantoni, chief economist with the Mortgage Bankers Association. “It’s a very strong flight to quality,” he said.
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