Why we are at historic low mortgage rates

While mortgage rates don't exactly follow the 10 year US Treasury bond, they do move in a similar fashion.   Once a mortgage is generated, the IOU part of that mortgage (the note) is packaged up with thousands of other mortgage notes and sold to investors around the world.  Fannie Mae and Freddie Mac and HUD are the entities who do this.  So, investors can buy an IOU form Uncle Sam or from Fannie Mae.  Uncle Sam is a safer bet than you or me (i.e. Fannie or Freddie), so the rate on a US treasury bond is lower than the rate on a mortgage note.  But, our 30 year mortgage rates do track the 10 year US Treasury bond as they are both part of the bond market.   Since 1962  the yield on the 10-year Treasury note closed below 2% on 0 trading days, i.e., never.  Since the beginning of this month (September 2011), the yield on the 10-year Treasury note has closed below 2% on 8 separate trading days including last Friday 9/23/11.  That is why mortgage rates are at their lowest point in the last 30 years.