The pain in Spain: Europe's woes are borrowers' gains

— -- The latest global financial jitters are producing big savings for the U.S. government, homeowners and other long-term borrowers, but tough times for savers.

The yield on the closely watched 10-year Treasury note — which helps set mortgage rates — swooned to a record low of 1.62% Wednesday. Five years ago, it was 5.03%.

Low rates are a huge savings for U.S. taxpayers because they'll save billions of dollars on the cost of repaying some of the federal debt.

Mortgage borrowers will get some benefit from Europe's woes, too: A 30-year, fixed-rate mortgage was at an all-time low of 3.78% last week, according to mortgage giant Freddie Mac.

If Treasury rates remain at current levels, mortgage rates could fall a bit further, says Keith Gumbinger, vice president of HSH.com.

Will rates fall on other consumer loans, such as credit cards, home equity loans and personal loans? "Not a chance," he says.

And, because bond prices rise when interest rates fall, bond investors have fared well. The average U.S. government bond fund gained 7.6% the past 12 months, according to Lipper.

Although some people will benefit from lower rates, savers will continue to suffer with tiny yields on bank CDs.

Low rates have an ominous edge to them. Bond traders accept lower yields when they think the prospects of economic growth are slim.

"The bond market is a powerful leading indicator — in many ways the best economic forecast the market comes up with," says Joe Davis, chief economist at Vanguard.

Today's yields are below their levels in the depth of the 2008 credit crunch. In part, that reflects slowing exports to Europe, as many eurozone countries are in or near recession.

Bond yields also fell because of disappointing home sales figures from the government Wednesday, says Elaine Stokes, co-portfolio manager of Loomis Sayles Bond fund.

Finally, traders have been snapping up Treasuries because they're safe — and given the European crisis, safety is the watchword.

"The continuous stream of news out of Europe gets their minds back to the dire situation they're in," says Gregory Whiteley, portfolio manager at DoubleLine.

And even at 1.62%, Treasuries look better than German 10-year bonds, which yield 1.27%, says Bloomberg. "Germany is the safe haven in euros, and the U.S. is the safe haven for people who don't want to be in euros," Whiteley says.

European investors are looking for a haven because Spain will need about $23.6 billion to bail out Bankia, one of its leading mortgage lenders. Without help from the European Central Bank, Spain will have to raise that money in the bond market. Spanish bond yields are at 6.64%.