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发表于 2009-7-15 17:02
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 Will 5-Year Mortgage Rates Fall Further?* e$ W( J$ d4 Z7 g$ c9 g3 {
( I+ b( Y: t) [1 @" d: m5 s) s* y Banks last raised mortgage rates on June 9, when the 5-year bond yield was at 2.68%.
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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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' V, N1 v; B& P: G, y: IBMO 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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4 _& l3 C' n0 J/ i- N+ l/ } ?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."4 c9 F2 w4 x6 u4 a a( r" b) o6 |7 b
7 h7 c7 Z5 ?, \# @2 y1 \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.5 \5 l7 E. G% Y( C6 U$ j
* @+ l x; Y8 p+ [* 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 $478 over five years, assuming a 25-year amortization and typical fixed rates.
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But remember, trying to time bond and mortgage rates is financially hazardous. While you’re waiting, rates can move the wrong way—quickly. 9 _) f6 }5 X6 z$ L# ^
( [+ `9 Z% z4 B- o' LYou’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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