MARIA BARTIROMO, anchor:

In today's CLOSING BELL Close Up, Sharon Epperson tells us why the 10-year treasury yield is giving home buyers and those looking to refinance a reason to celebrate.

SHARON EPPERSON reporting:

Mr. ANTHONY HSIEH (HomeLoanCenter.com CEO): Most of us in the industry have sort of our champagne bottles ready to start another party if the treasury yields come down below 4 percent again.

EPPERSON: A cause for celebration for mortgage lenders and borrowers, the yield on the 10-year treasury note is now at 4.1 percent, its lowest level since April. And mortgage rates, which closely follow 10-year treasury yields, have also dipped. The average rate on a 30-year fixed rate mortgage fell to 5.75 percent last week, down from nearly 6.25 percent two months ago, according to weekly survey data from the Mortgage Bankers Association.

Bob Moulton of Americana Mortgage says rates could continue to fall if economic conditions or international events move treasury yields lower.

Mr. BOB MOULTON (Americana Mortgage CEO): It needs to stay there a couple of days and then you might see the decrease in the mortgage rates of about an eighth, maybe a quarter. However, on the contrary, when the 10-year note does go up, you'll see mortgage rates spike up fairly immediately.

EPPERSON: To protect yourself, Moulton advises borrowers to lock in mortgage rates now for 60 to 90 days. Also ask for what is known as a float down option with your locking guarantee in case rates fall further.

Mr. MOULTON: In other words, if you lock on a 30-year fixed at 5.5 percent with no points right now, if the rate goes lower, will you be eligible for the lower rate? Frequently, a lender or mortgage broker will enable you to float that rate down.

EPPERSON: And fixed rate loans may now be more attractive to borrowers who had been opting for adjustable rate mortgages and interest only loans to keep their monthly payments down.

Mr. HSIEH: As rates get closer to 6 percent, we see 20 to 30 percent utilization of adjustable to interest only options. As rates drop to mid-five, it usually decreases to about 20 percent, and when rates drop to low fives, it decreases to about 15 percent. So as you can see, there is a direct relationship on the fixed rate product versus an alternative product.

EPPERSON: Where treasury yields go from here and what happens to mortgage rates as a result could depend a great deal on Friday's employment report. Economists estimate maybe 150,000 jobs were created in August. And if the number comes in under that, bond prices could rally and push yields below 4 percent, and mortgage rates could fall even further.

So, Maria, more reason for borrowers to celebrate.

BARTIROMO: Everybody was so worried that this economy was strengthening, and yet, we've got pretty good rates. Sharon, thanks. Sharon Epperson with the latest there.