The seven-day period from October 25th to November 2, 2011, excluding the weekend, witnessed mortgage rates behave like a visual version of the famous “Yakety Sax” song from the British comedy series The Benny Hill Show. They rose precipitously influenced by rising bond yields over relief at something at last being done about the European debt crisis. As that proved premature, bond yields fell again and mortgage rates followed. Current mortgage interest rates are the lowest they have ever been. They are still extremely sensitive to external market events even in Europe.

October 25 saw the 30-year fixed-rate mortgage at 4.11 percent and the 15-year fixed-rate mortgage stood at 3.49 percent. At this time, the 10-year Treasury note yield was 2.14 percent. By October 27, the yield had risen to 2.42 percent and mortgage rates followed. The 30-year rose to 4.26 percent and the 15-year rose to 3.59 percent. However, events over the next few days spooked investors badly enough to run for Treasury securities again, sending the 10-year yield back down to 2.03 percent by November 2. The 30-year rate fell back down to 3.97 percent and the 15-year fell to 3.38 percent.

The European debt crisis currently has markets spooked with the Federal Reserve forecasting slower growth and higher unemployment than it did previously in June. The housing market is also projected to dip for a third time, with home prices falling another 3.6 percent by June 2012. This will put them at 35 percent below the peak in early 2006. A weak housing market makes it unlikely that even current mortgage interest rates will entice potential homeowners into taking out a loan. The Federal Reserve hinted that an expanded program of purchasing mortgage bonds is a viable option to support the housing market on November 2.

Current shoppers in the housing market have to be careful not to let falling home prices put them in negative equity. They can Google mortgage rates to find out what the lowest ones are. The only hope for new borrowers is to find a low enough rate that will allow them to pay off a significant portion of their balance before sinking home prices catch up with them. Google mortgage rates can reveal hidden bargains not available through normal channels. The housing market will remain depressed along with the economy until fundamental structural changes ensue.