30-yr fixed-rate mortgage rates are back down to record-low levels: a bit less than 3.4%, according to the nationwide average calculated by the Mortgage Bankers Association (see Chart #1). And they could fall further, given that the spread between current yields and the 10-yr Treasury yield is exceptionally wide. If past norms were to return, 30-yr fixed-rate mortgages could be trading at 2.4-2.7% (see Chart #2, which shows mortgage rates and 10-yr yields on the top portion, and the spread between the two on the bottom portion).
Chart #1
Chart #2
After a sharp drop