Operation Twist must be working, because 30-year fixed mortgage rates have set a new record, and breached a new threshold, diving below 4% nationwide. 

According to Freddie Mac’s weekly survey of mortgage rates, nationwide 30-year fixed-rate mortgages average 3.94 percent. Just last week, they hovered right above 4%, at 4.01%. Only mortgages in the western region of the U.S. dipped below 4% last week, now the average has dropped 7 basis points, bringing the average to unheard-of lows.

Photograph: prokop / PHOTOCASE source

This week, according to Freddie Mac’s Primary Mortgage Market Survey, every region other than the Southeast had sub-4% rates for 30-year mortgages. The lowest again was the West with a 3.87% average, and the Southeast was the highest at 4.02%.

Housing Lacks Luster

There has never been a better time to purchase a new home or refinance an existing mortgage, judging by the rates. The only problem is that demand is low. Terribly low. As we reported last week, the National Association of Realtors reported that pending home sales were down in August, compared to July, but they were up compared to August 2010 numbers.

To put in perspective just how low a sub-4% mortgage is, from a historical perspective, consider this: Freddie Mac’s October 9, 1981 survey of mortgage rates reported an average of 18.68%, nationwide. Two decades ago, almost exactly, mortgage rates were almost five times higher than they are today. Ten years ago, that national average was 8.87%, more than double today’s rates.

The Federal Reserve has been keeping rates as low as possible in an effort to stimulate the economy, by making borrowing easier, both for individuals and businesses. So far, it doesn’t seem that the housing market has responded.

The National Association of Realtors will release their pending home sales numbers for September on October 27, which will start to give us a sense of whether the Fed’s Operation Twist, which brought mortgage rates this low, is actually compelling people to buy homes.

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