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发表于 2009-7-18 08:28
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ZT - TMG - Will 5-Year Mortgage Rates Fall Further?
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- r' I+ n2 \. t) T& b) S' TBanks last raised mortgage rates on June 9, when the 5-year bond yield was at 2.68%.
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* O4 M! w$ }0 c' j( y$ Z/ VSince then, the 5-year yield (which guides fixed mortgage pricing) has fallen to 2.44%, but bank rates have not budged.. A* a s6 f, z; A- Y7 E3 i
. _) S1 M4 N: \# j- k4 O* D7 _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." L9 o" _9 b4 `
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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."* \: h6 T' }% M+ Y) L
- {! }6 t9 g& G* aThe 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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8 Q: q7 ]. d1 n! @1 \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 $478 over five years, assuming a 25-year amortization and typical fixed rates.
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But remember, trying to time bond and mortgage rates is financially hazardous. While you're waiting, rates can move the wrong way-quickly. " v7 P! ~$ d/ ?5 T9 g" {0 a
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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.
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