5 year bond hits another new low ... why haven't fixed mortgage rates followed?
Five-year bond yields hit another record low for the third straight day. That’s reason to celebrate if you’re shopping for a fixed mortgage, or at least it should be. The rates on fixed mortgages, which track bond yields, are due for a monster cut. Just don’t ask when. (They tend to move down just as fast as gas prices!!!)
To put things in perspective, the difference between today’s posted 5-year rate (5.39%) and the corresponding 5-year yield (1.39%) is a whopping 4.00 percentage points. That represents a HUGE spread (i.e. lender profit margin) in ages.
The lag (in dropping fixed rates) is really about financial institutions assessing whether the movement is going to be sustained.
If you can find a 5-year rate in the low 3% range, that is an accomplishment.
Jeff Trounsell, BA, AMP
CENTUM Pacific Mortgages Inc.
Email: firstname.lastname@example.orgWeb: www.jefftrounsell.com
Posted by Jeff Trounsell
on August 11, 2011