 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?
' p9 ]# `( T6 j& M6 d! c
& R3 t4 t2 Q* n( F7 E7 } Banks last raised mortgage rates on June 9, when the 5-year bond yield was at 2.68%.
& I# j3 i7 a; V$ X
8 G9 u8 b9 v" u% bSince then, the 5-year yield (which guides fixed mortgage pricing) has fallen to 2.44%, but bank rates have not budged.
; K/ a! D& c0 a( Z3 K! v0 D2 ^1 u* X9 Y. j2 j @- E3 g
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." * g; x- _4 x7 r7 Q
8 T1 t0 _' R1 M' S& g
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 o& \# |, F5 |4 S8 a
4 Y6 ?1 x8 v- {& M- V" l6 J1 _
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.
% H; O# W- a2 P$ \7 g) j% q( X) Q8 }8 ?7 G& f1 ?
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 $478 over five years, assuming a 25-year amortization and typical fixed rates.# ^& a7 b& r0 a
. P+ J' C* t, p b) d) DBut remember, trying to time bond and mortgage rates is financially hazardous. While you’re waiting, rates can move the wrong way—quickly.
, z" |1 W) r Z/ I8 d' {& e/ [8 j3 W# t( n$ m( v) B) V; o2 ^
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. |
|