Housing

The Markets Are Nervous. But Mortgages Are Cheap!

As stock prices fell last week, lots of people bought U.S. Treasury bonds — that's what investors do when they get nervous and want to park their money their money in a safe place.

One interesting side effect: Mortgage rates fell in the U.S.

The interest rate on 10-year Treasurys fell to 3.2 percent on Friday. Mortgage rates are typically about 1.5 percentage points above the rate on 10-year Treasurys, this morning's WSJ notes in a front-page story on mortgage rates.

The average interest rate for 30-year fixed mortgages is 4.84 percent, the lowest its been all year, according Freddie Mac's latest weekly mortgage survey. The average rate for 15-year fixed mortgages is 4.24 percent — the lowest it's been since 1991, when the survey started tracking that type of loan.

The decline is somewhat surprising, given the fact that the Fed recently ended its massive effort to keep mortgage rates low by buying more than $1 trillion in mortgage-backed securities. Lots of people thought the end of that program would lead to higher mortgage rates.

Lower mortgage rates make it cheaper to buy a house. But at the same time, the WSJ notes, lenders' standards for who gets a loan remain relatively strict. So lots of people may not qualify.

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