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发表于 2009-7-15 17:02
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 Will 5-Year Mortgage Rates Fall Further?6 y1 M1 `! w$ L& d/ k
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Banks last raised mortgage rates on June 9, when the 5-year bond yield was at 2.68%.& j; j) P/ x8 V# N- n
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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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" Z9 H. O' a% }2 \' F! Z/ M4 o* DBMO 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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% d; k8 ?: k {1 M* `- [$ U# VHe 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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- r% Q# [1 d4 lThe 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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! u" X9 r3 d! c; WIf 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 $478 over five years, assuming a 25-year amortization and typical fixed rates." E- Z) D( I6 B
7 v' L8 h8 }. t {% F. a9 @But remember, trying to time bond and mortgage rates is financially hazardous. While you’re waiting, rates can move the wrong way—quickly.
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: q8 n4 m7 C. F( i$ f2 Y5 z. bYou’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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