As of mid-December, the average thirty-year fixed-rate mortgage was near its historic low of about 3.3%, or half its level in August 2007 when financial turmoil began, reported Andreas Fuster and David Lucca in a blog posted on the Federal Reserve Bank of New York website.

However, yield declines in the mortgage-backed-securities (MBS) market, where bundles of mortgage loans are sold to investors, have been even more dramatic. In fact, all else equal, had these declines passed through to loan rates one-for-one, the average mortgage rate would now be around 2.6%.