Interest Rates Drop As Fast As They Rise

Just last week, interest rates took their biggest jump in 21 years. Today, they dropped almost as much as they rose last week - almost a 1/2 point. The national average for a 30-year fixed-rate mortgage (with no points) went from 6.74 percent to 6.32 percent.

Wondering why interest rates are so volatilite? Bankrate has a pretty good explanation as to why we're seeing these crazy swings in interest rates. Here's an excerpt:

Mortgage rates' volatile behavior is part of the credit crisis. There have been wide swings in various interest rates and bond yields in the last few months, and mortgages aren't immune.

Three events are combining to push down on mortgage rates this week. First, governments and central banks in North America and Europe have been trying to loosen lending among banks, so that banks then will become more willing to lend to businesses and consumers. This week, that effort began to show results, as interbank lending rates fell.

Second, stock prices have been falling. Investors respond by pulling some money out of the stock market and buying bonds, including mortgage-backed securities. As a result, bond yields fall — and mortgage rates follow.

Third, it becomes increasingly clear that the U.S. economy is in recession, and investors and economists are coming around to the idea that the recession will be deep and long-lasting. Interest rates tend to fall in recessions.

Several buyers I'm working with held off on putting an offer on a property because of the jump in rates last week, but are now ready to move forward due to the drop in rates. If you're a buyer who put things on hold last week as they they did, here's your chance to get back in near the same rate as a few weeks ago.