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发表于 2009-7-15 17:02
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 Will 5-Year Mortgage Rates Fall Further?0 b$ C. ~6 O) T
) z, V( K6 E7 L/ i* I Banks last raised mortgage rates on June 9, when the 5-year bond yield was at 2.68%.
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: _' e& h8 O/ ?3 w4 p" B- QSince then, the 5-year yield (which guides fixed mortgage pricing) has fallen to 2.44%, but bank rates have not budged.& h- U8 d; v! G
- q2 N4 g Q- |9 ]; B' B" C( i: n% 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." . W4 w* A7 q8 v) f# [
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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."5 f2 O. y1 l' j) R3 k! N
5 d( E% S! I7 R5 d; oThe 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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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.4 t3 ]5 G, j) V* y, V' r
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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. & z/ y0 n+ S- b5 M
f5 g. d% Z0 ]; XYou’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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