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发表于 2009-7-15 17:02
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 Will 5-Year Mortgage Rates Fall Further?
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7 B; {( Z( o% h! o5 V Banks last raised mortgage rates on June 9, when the 5-year bond yield was at 2.68%.
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. O+ {, o) \$ Z$ CSince then, the 5-year yield (which guides fixed mortgage pricing) has fallen to 2.44%, but bank rates have not budged." }' N4 Y% a8 b
p+ t7 Q+ _6 _+ s4 M) pBMO 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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, @$ v1 s/ V( U9 N1 N+ XHe 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."- X" @$ \) E! s! N: w- C( k( N
% ~: A8 Y! w8 z, j/ mThe 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.' z( P0 w/ @' g1 t# c( P* [ ]
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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.
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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. / A' w" [1 G7 \8 U6 v- n* l; o1 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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