Long Term Mortgages Hit Bottom and are on the way up

Long term mortgages have hit the bottom and are likely to increase as bond rates have headed higher and are above 2% mark. The bond rates is the key factor that determines the long term interest rates as many lenders price their mortgages based on the bond rates.

Typical pricing is 1.5 - 2% above the bond rates, with the 5yr bond trading on May 1, 2009 at 2.02 and had been increasing from a low of 1.85%, there is pressure to raise interest rates.

The bond market reacts to the economic news and typically positive news will trigger the bond rates to go up and negative news will do the opposite.  This being said, there is not that much positive news in the financial markets and with the Swine Flu pandemic problem, this will definitely affect the financial markets.  

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Roy Singh

Roy Singh

Sales Representative
CENTURY 21 Heritage House Ltd., Brokerage*
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