Money is on sale! Come in and enjoy the low, low prices!
On Tuesday, borrowed money got cheaper — and cheaper. For example, Bankrate, a consumer financial services company, started the day by saying lenders were offering 30-year fixed-rate mortgages at an average of just 3.4 percent.
By the end of the day, Zillow's mortgage rate tracker was showing that the national average had slipped down to 3.27 percent.
And investors around the world were sending the U.S. Treasury this important message: We'll lend you the cheapest money you've ever seen.
The yield on the benchmark U.S. 10-year Treasury note closed below 1.4 percent for the first time on record. It settled at 1.367 percent. Even during the Great Depression, interest rates were never that low on the 10-year Treasury note. You could look it up.
And the 30-year bond's yield slipped to 2.138 percent, below its record low of 2.226 percent Friday. Incredibly, some analysts are saying the yield may soon fall below 2 percent.
Why such cheap money?
Because following the United Kingdom's vote on June 23 to exit the European Union, investors have gotten very nervous about the global economy. They want to park their cash someplace safe. And that means investing in government debt issued by safe-looking countries like the U.S., Germany, Switzerland and Sweden. In other words, taxpayers in such countries can get cash at historically low rates.
And the low Treasury rates, in turn, serve as benchmarks for other types of lending rates, like auto loans, home equity loans and credit cards. They even set the tone for mortgage rates.
"The Brexit aftermath left markets rattled throughout last week, driving the continued decline in mortgage rates near all-time historical lows," Erin Lantz, vice president of mortgages at Zillow, said in a statement.
So if you need to borrow money, this is a good time to do it.
And if you are a saver who lets out a sad sigh when you see your savings account statement — which shows you earned maybe a dime in interest — prepare to get even sadder.
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