Interest rates moved down to new record lows this week .The following are excerpts from the newsletter on interest rates published by HSH Associates :

“While not really a perfect storm, mortgage rates trekked to new lows this week. The bright noisiness of the election now faded, the reality of the economic climate here and abroad continues to sap enthusiasm from the stock market, and that has pushed money back into Treasury bonds. The influential 10-year Treasury stood at a yield of 1.86% on October 25; it closed Thursday at 1.58%, and that has helped push mortgage rates back down to record lows.

“ Markets are of course concerned that the impending “fiscal cliff” will cause a recession. The Congressional Budget Office has said that this would be likely to occur should no form of compromise be reached. However, even if a deal is reached and we don’t fall off a cliff, growth is already slow enough as to raise concerns that we might end up with a recession anyway. No matter how any compromise is configured, growth is likely to be trimmed to some degree, and we don’t really have a lot of cushion to prevent new drag from creating a negative rate for GDP. Suffice it to say we may skirt a new recession, but are unlikely to escape a period of slower to much slower growth, regardless. Markets already seem to be adjusting to this likelihood.

Be it a cliff or a compromise, will the event bring the kind of clarity and certainty needed to promote stronger hiring and more expansion? Somehow, that just doesn’t seem likely, at least not until all the details and subtleties are known, whenever that might be.

Mortgage rates? Holding in new low territory seems the most likely path for next week, with the averages perhaps shedding a couple more basis points.”