A funny thing happened when the United States' credit rating was downgraded from AAA to AA+, essentially signifying to the world that US Bonds were suddenly not as safe… everyone freaked out about the economy and moved their funds from stocks to those same US Bonds that had just been downgraded!

It's hard to avoid the irony.

As a general indicator and not an exact science, mortgage interest rates tend to track the 10 Year US Bond Yield. So, as money piled into government bonds and the 10 year yield dropped to the lowest rate on record, so too has the average interest rate on 30 year fixed mortgages.

The average rate on a 30 year fixed mortgage dropped to a record low of 4.15 percent which fell below the previous record of 4.17 percent set in November of 2010, says Freddie Mac. Just last week the average rate was 4.32 percent and as high as 4.91 percent in April. Five years ago the average 30 year fixed rate was around 6.5 percent, and it exceeded 8 percent in 2000. Meanwhile, the average rate on the popular refinancing option, the 15 year mortgage, fell to 3.36 percent. Freddie Mac surveys lenders across the country Monday through Wednesday each week to come up with the average rates.

Today's significantly lower rates means that buyers can comfortably afford more expensive homes than in years prior. As an example, a 20% down buyer in 2005, who wanted to keep their mortgage payment around $2,000 a month, can now afford a home that costs around $100,000 more. Add in the availability of low priced homes and buyers are able to get way more home for their money.

- Prospera Real Estate's Seattle and Bellevue real estate news, market trends, statistics, and blog