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发表于 2009-7-15 17:02
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 Will 5-Year Mortgage Rates Fall Further?
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% x' _$ ^/ G: P& T) P+ _; Z$ F, U Banks last raised mortgage rates on June 9, when the 5-year bond yield was at 2.68%. i- { O8 I7 w9 r1 D" n1 X
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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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& B' h$ v s% |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."# d* }% f, g: x" _& u/ Z- w
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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.
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2 P r9 K2 o$ T. e7 ]0 cIf 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. Y0 B! m: j3 y; Y
; R" J5 Z+ q v% B( r5 I: D' IBut 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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/ I: i5 t* j0 _, B" @! g) ]% n# aYou’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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