Home > interest rates, personal finance > Yields Plunge. Spreads Explode#comments

Yields Plunge. Spreads Explode#comments

Fat spreads mean fat profits for lenders. It also means that fixed rates are way higher than they should be, based on the cost of funds. The last time the 5-year yield was at 2.30%, discounted five-year fixed rates were 3.75%. (The banks’ “special offer” discounted rates are 4.49% today.)

the fixed spread is high not just for the past 15 months but also historically… look at the historical spread (assuming a 1.5% discount to posted rates) since 1990… the spread was less than 1.0 % prior to 2006

5-Yr Fixed Mortgage rate Spread since 1990

Source: Bank of Canada

What will make the banks reduce mortgage rates?
They used the credit crisis as an excuse to increase all fees (transaction & account fees) and spreads (LOC, HELOC, car loans, etc) but now that the markets are better, they haven’t reduced or discounted ANY fees or interest rates.

via Yields Plunge. Spreads Explode#comments.

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  1. October 26, 2010 at 9:02 AM

    i hate car loans because sometimes that interest rate is not very fair*~-

  1. July 26, 2010 at 2:54 PM

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