 鲜花( 115)  鸡蛋( 0)
|

楼主 |
发表于 2009-7-15 17:02
|
显示全部楼层
 Will 5-Year Mortgage Rates Fall Further?0 V& G/ t6 i# I u5 g" @
. ?' W g4 {, x' U) t
Banks last raised mortgage rates on June 9, when the 5-year bond yield was at 2.68%.$ r( ^8 Y' X0 @
& H9 d$ j! Q4 E7 U- J1 BSince then, the 5-year yield (which guides fixed mortgage pricing) has fallen to 2.44%, but bank rates have not budged.3 p0 ?. s' u* W3 o; C6 \- \
* m( _9 F9 ^2 M. y, aBMO 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."
0 L5 Z! F8 f4 K8 D1 D% m
' C# K9 T6 `, _* W2 M3 S6 jHe 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."7 u9 _8 G% M: t4 Y% u
! R$ @6 J- Y) [% [7 h8 A" Z6 g
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.. a/ `- _% O V. A- W; ?
6 ~( I- ]* f" Q/ a" s
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 $478 over five years, assuming a 25-year amortization and typical fixed rates.
" V$ G7 ?6 F4 f, l/ d
( e T0 B# n9 l) D8 Y& fBut remember, trying to time bond and mortgage rates is financially hazardous. While you’re waiting, rates can move the wrong way—quickly.
1 g3 I, t. B$ @0 a# x5 l. a4 p
& m# g% i( G/ P) D& _9 zYou’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. |
|