Tuesday, November 20, 2007

Mortgage Fixed Rates Lower?

Right now we are seeing the fixed rates being artificially higher for consumers. Fixed mortgage rates are determined by the bond market. Today, the 5 year bond rate is 3.89% and the best discounted mortgage rate is 5.89%. This means there is a 2.00% override for the banks. Normally the spread is about 1.40% above the lowest bond rate. So in theory the 5 year fixed rate should be 5.29%. Watch for lower fixed rates in the future or higher bank profits.

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