As the European debt turmoil continues investors are pouring their money into U.S. government securities and as a result mortgage rates have fallen to their lowest level so far this year.
Freddie Mac reported today that the average rate on a 30-year fixed mortgage dropped to 4.78 percent this week down from 4.84 percent last week which is the lowest level since early December when rates hit 4.71 percent.
The European debt crisis has pushed yields for both 10-year and 30-year Treasury bonds to their lowest levels of 2010. Rates on 30-year home loans and 10-year notes often rise and fall in line with one another.
Rates were pushed down to very low levels last year by a campaign that the Federal Reserve started in order to reduce borrowing costs for consumers. Mortgage rates were expected to begin an upwardly climb after the program ended this spring, but, instead they have dipped primarily due to fears that the government of Greece would default on its debt and in turn boosted the demand for U.S. Treasurys.