Mortgage rates to get more attractive as 10-year Treasury hits record low

Consumers in the market for a home could soon be seeing even lower mortgage rates.

Concerns about the coronavirus have shaken global markets, sending stocks plummeting and bond yields lower, which will translate into lower mortgage rates.

Already lower mortgage rates could continue to slide, giving the consumer an advantage.

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"As fears regarding the coronavirus have increased, Treasury yields have dropped to record lows this week amid the ensuing financial market volatility," said Mike Fratantoni of the Mortgage Bankers Association. "Next week's results will show the impact this drop in Treasuries had on mortgage activity."

The yield on the 10-year Treasury fell as low as 1.31 percent, a record, according to TradeWeb, before recovering somewhat to 1.33 percent late Tuesday afternoon. The yield is down from 1.37 percent late Monday and far below the 1.90 percent it stood at in early 2020.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 3.73 percent from 3.77 percent.

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The already low mortgage rates have driven demand for mortgage applications, rising 1.5 percent in the past week, according to the weekly survey from the Mortgage Bankers Association.

The seasonally adjusted purchase index increased 6 percent.

"Last week appears to have been the calm before the storm. Weaker readings on economic growth caused a slight drop in mortgage rates, bringing them back to their level two weeks ago," said Fratantoni. "Purchase volume remained strong, supported both by low rates and the increased pace of construction over the past few months."

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The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.