A stock market swoon of nearly 1,000 points sent mortgage rates tumbling Thursday afternoon with the yield on the benchmark 10-year Treasury falling to almost 3.2%. As the market pared its losses, the Treasury yield improved to 3.4% at close of day.

John T. Walsh, president of Total Mortgage Services of Connecticut, noted that at one point during the day the carnage brought the rate on a 30-year rate FRM down to 4.75% with no points. He said that if rates were to slide further into 4.50% territory it could "bring a lot more people back into the market" for refinances.

Most mortgage stocks suffered with the market. Some mortgage insurers saw their shares drop by 13%, including Radian Group. PHH Corp. suffered a small loss, as did PennyMac, the publicly traded mortgage vulture fund/conduit. Fannie Mae and Freddie Mae fell by about 6% each.

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