Investors watched stock markets swoon and economists fretted about the nation's fragile recovery on the first day of trading after the unprecedented downgrade of the nation's credit rating.

But amid the gloom Monday were a few bright spots for consumers: Borrowers may be able to get better rates on mortgages and other loans, and even pay less at the pump.

In an ironic twist, jittery investors who bailed out of stocks poured money into U.S. Treasuries — still considered a haven in an uncertain world despite doubts raised by Standard & Poor's in its credit downgrade late Friday. The buying spree pushed down Treasury yields that influence other consumer rates. Investors also abandoned commodities to rush into government bonds, and oil prices have fallen to their lowest level in months.

"If there is uncertainty and fear here, Europe and globally, the Treasury market is still the place to go," said Alan Levenson, chief economist with Baltimore investment firm T. Rowe Price. "It's the vehicle of choice in a flight to quality."

Borrowers should act fast, said Adolfo Laurenti, deputy chief economist with Mesirow Financial in Chicago, because the emotions that caused stock prices to fall Monday could reverse course with new developments. For those able to refinance or qualify for loans in the tight credit market, current low interest rates on consumer loans might not be around a few weeks from now.

"For consumers, this opened a wonderful opportunity to refinance or if you are thinking of getting loans," said Laurenti. "You want to lock in things soon."

S&P became the first of the three major credit agencies ever to downgrade the nation's credit rating, based on pessimism that Congress and the Obama administration won't be able to overcome their political differences to address the government's debt problems.

Although Moody's Investors Service reaffirmed the country's top credit rating Monday — the second time in a week — it wasn't enough to quell nervous investors. And some economists continue to worry how the downgrade will affect consumer and business confidence — and ultimately the economy.

"Most people don't think we are going to have a double-dip [recession], but there is a chance of that," said Christopher Carroll, an economics professor at the Johns Hopkins University. "This is just one more reason for people to be nervous. To the extent that they are nervous, this makes it a self-fulfilling prophesy."

Ultimately, the strength of the economy and not credit ratings will determine how consumers fare, said Greg McBride, senior financial analyst with Bankrate.com.

"Not only is it the key determinant of where interest rates are going, but it is also the main pocketbook issue for Americans," said McBride. "If we have another recession, there are a couple of million more Americans who will lose their jobs."

Stocks had already been on the slide before the Dow Jones industrial average shed nearly 634 points Monday. Investors stampeded to Treasuries, pushing the yield on a 10-year note to the lowest level since January 2009.

Homebuyers have been taking advantage of exceptionally low interest rates lately. The average fixed-interest rate on a 30-year mortgage last week fell to 4.54 percent, the lowest since November, according to Bankrate.com. The Mortgage Bankers Association reported that loan applications in the last week of July jumped 7 percent over the previous week. Home equity lines of credit fell to 5.42 percent last week, Bankrate.com reports.

Similarly, credit card rates have been falling since this spring, with the average variable rate running 14.4 percent in recent weeks.

Car buyers also might find it's a good time to shop. Edmunds.com, a car information website, said Monday that "market factors suggest that credit will remain available, that interest rates will remain stable and that incentives may help keep car prices low in the immediate future."

Meanwhile, dropping oil and commodity prices are expected to translate into lower gas prices after a summer of high fuel costs. "Consumers are getting a bonus now," said Jerry Scheinker, executive vice president of Janny Montgomery Scott in Baltimore. "They will pay less for gas."

In the long run, the impact on consumers likely depends on whether the political stalemate in Washington is broken.

"The U.S. needs to show that it has a commitment to reducing its debt level and bring some balance back to revenues and expenses. If it can do that, rates can stay low," said Jim DeMasi, managing director and chief fixed-income strategist at Stifel Nicolaus in Baltimore. If not, he adds, "you will over time see rates start to increase."

For now, experts said those in the market for a home, car or other big purchase requiring a loan should try to lock in rates while they remain low.

And investors may be in for a bumpy ride.

eileen.ambrose@baltsun.com

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