Can Mortgage Rates Go Any Lower?

How does that old Chinese proverb go? I think it's: May you live in interesting times. Well, it sure got interesting Thursday morning when stocks tumbled almost 400 points on the Dow and the yield on the benchmark 10-year bond hit yet another new low: 1.75%. That's not a misprint. A few weeks back I was joking about a 3% 30-year FRM -- now I'm starting to wonder. Even if you could buy down the rate, would any depository want to hold 3% paper? Well, maybe. But would they want to hold 2% paper? In short: it's crazy out there. In theory, falling rates will help the refi market – that is, if appraisers cooperate. As for the 'purchase money' business, I would venture that only home buyers with iron stomachs will dip their toes in the water this weekend. We shall see...