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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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l! }1 e& e# P* k/ V& LBanks 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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7 I4 G: W1 D" \, B7 Q- rBMO 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." ' w) v% G$ G5 ~0 W% m
d0 F7 w4 r, M q' f* N& hHe 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."# a4 ~7 f5 H/ f# ~3 E
" e& @# p* w/ `; H+ \0 HThe 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.# [% c: J3 K9 Z8 B3 x+ W
, I' p: L" Y4 H1 KIf 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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* v" P9 O. `. lBut remember, trying to time bond and mortgage rates is financially hazardous. While you're waiting, rates can move the wrong way-quickly. . {. H; @! d+ b
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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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i: A ^: P* _; h1 t* r: d" i7 rwww.happymortgages.com |
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