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发表于 2009-7-15 17:02
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 Will 5-Year Mortgage Rates Fall Further?+ Z. g% g8 u3 Q- s# Y1 u# \
0 a$ d3 W) W9 H Banks last raised mortgage rates on June 9, when the 5-year bond yield was at 2.68%.7 K! x# ]9 e2 U5 r
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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.0 A1 F1 S; \, z$ T/ X( ^
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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." 0 f) S( N! z$ v) [) C( l+ @
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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."' ?7 N ]% x; C( y" q2 t5 F* l
4 V5 u8 `2 l0 f' ?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./ S G4 Z( X# r2 l# R2 O
, h" m7 x7 j& e6 q0 @" IIf 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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8 \0 p. S8 D! L- CBut remember, trying to time bond and mortgage rates is financially hazardous. While you’re waiting, rates can move the wrong way—quickly. 3 [( P H3 H2 M; R9 q' A/ z, w
- M, ]9 {/ t" i/ |6 n& v( fYou’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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