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发表于 2009-7-15 17:02
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 Will 5-Year Mortgage Rates Fall Further?0 h2 e2 X; T2 ], @5 W, e
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Banks last raised mortgage rates on June 9, when the 5-year bond yield was at 2.68%.2 D# b7 s& p& w, z' C8 L0 x1 R
; q) ?) O. s# f4 ]/ ]Since then, the 5-year yield (which guides fixed mortgage pricing) has fallen to 2.44%, but bank rates have not budged.
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6 f0 ^( h8 U# z3 [3 \BMO economist, Doug Porter, told the Toronto Star it’s because banks "want to be convinced that it is not a flash in the pan and that any retreat in yields is sustained."
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$ N/ n, w- o* Y4 `He says: "I believe that we are probably not too far away from that point. It might take a little more of a deeper rally (in bond prices) to make it completely convincing."
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The often quoted CIBC economist, Benjamin Tal, thinks yields could fall another 0.05% to 0.10%, but any drop in fixed-rates will be short-lived. "By the end of the year, we'll start seeing rates rising," he says.) U2 q6 Z% n$ ~
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If rates do drop another 0.10%, it would translate into a $5.50 monthly payment savings for every $100,000 of mortgage. That’s a total savings of $478 over five years, assuming a 25-year amortization and typical fixed rates.0 j v! E( u, S( Y
/ k( r* R* A: c# h; Y. GBut remember, trying to time bond and mortgage rates is financially hazardous. While you’re waiting, rates can move the wrong way—quickly. / z$ r% ~' o8 l+ X. Z% Z
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You’re usually better served by focusing on factors that can dwarf a 0.10% rate savings, like finding a mortgage with the optimal term and just the right amount of flexibility (pre-payment options, openness, readvanceability, etc.). Too much flexibility is a waste, and too little can cost you in the long-run. |
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