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发表于 2009-7-15 17:02
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 Will 5-Year Mortgage Rates Fall Further?" ~- f/ q2 k) y5 j) _: E
/ _9 d9 l# i0 b, ?4 t( \ Banks last raised mortgage rates on June 9, when the 5-year bond yield was at 2.68%.& q! v$ ], n( l$ G8 E
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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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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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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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- u3 w, A; ~& Q3 f' |; s' wThe 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.% `4 j; r; t/ A% W
9 f# l, X! C# V: ~/ x- L0 f `6 ^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 $478 over five years, assuming a 25-year amortization and typical fixed rates.+ u) @4 z$ E5 g* J0 ^' B
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But remember, trying to time bond and mortgage rates is financially hazardous. While you’re waiting, rates can move the wrong way—quickly.
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* ^: j# Q7 p+ `5 }1 M! Q& [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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