 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?
q" s) w6 h) L# |3 L( ]. {1 r$ X, H, W. Z; P. K( h
Banks last raised mortgage rates on June 9, when the 5-year bond yield was at 2.68%.
; u/ @* \, ]; o% Y y/ ]
7 M/ p: U! e& { m: mSince then, the 5-year yield (which guides fixed mortgage pricing) has fallen to 2.44%, but bank rates have not budged.$ F3 r3 D) b6 V1 o3 D& Y
1 }1 Z& e$ Z/ M ]3 C
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." 0 d7 n" \0 u6 _; ?, x$ q
) }* C" q" K9 R+ s' J
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."
2 s# o w" S6 f% h% S7 L" H' f6 t" Q9 Y5 Y; f2 t$ C
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.
X- D: T1 t0 o, `/ {6 Q
$ d6 T+ r& w) ?( @ E5 \% ZIf 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 $478 over five years, assuming a 25-year amortization and typical fixed rates.
: h( J8 c- ]+ a+ d: A# r+ ~/ k3 e; Z+ H$ p: H
But remember, trying to time bond and mortgage rates is financially hazardous. While you’re waiting, rates can move the wrong way—quickly.
" X, W0 y0 s6 [- R; S. h H$ T% g7 ^) K
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. |
|