Don’t think my savings account is going to be paying 1.70% much longer.
Several months ago, I felt super smart and fortunate to cash out refinance into a 30-year at 3.625%. Now I feel like a moron.
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Looks like @anon10396289 called long treasuries accurately. Insane to see the short term price moves in long treasuries over the past couple of weeks, but especially today.
So refinancing the mortgage is probably something I should be looking at? 27 years left, owe about $390k at 4% fixed. Will probably be in the house for 5-10 more years but that is not a given, wife gets a new job like every 2 years and both of us are not opposed to moving somewhere with better weather so it’s hard to say for sure.
Feel like if I can get down around 3% with 4 or 5k in closing costs it’s a definite yes?
Check how low you can get with 15 or 20 years and compare monthly payment (all in) and you might be able to cut a ton of years off with the same rough payment as you’re paying now. (That is if you are interested in building equity faster.) At one point I went from 25 years left to a 15 mortgage at roughly the same payment and I’m glad I did.
Honestly, it’s probably not a great idea for you to refinance if you are paying 4 or 5k closing costs and might be out of the house in 5 years or less. I would run some models in excel and see where your equity ends up in 5 years in either scenario.
I would try to find a way to get lower closing costs even if you get a worse rate. 8 years ago I did a refinance and was in a similar position and my bank basically refinanced my remaining mortgage into Home Equity loan, which meant closing costs in the hundreds instead of thousands, and keeping the same monthly payment but ending a couple years earlier. This meant the transaction was net positive for me after like 6 months instead of 6 years. I wasn’t in a position of 27 out of 30 years left though.
Anyway I would talk to a banker about your specific situation and not just jump on the lowest rate you can get, and it may not be worth it regardless
https://twitter.com/mattyglesias/status/1235950299296206848?s=19
https://twitter.com/mattyglesias/status/1235950697411153922?s=19
I used to understand bonds and then I forgot. I assume the yield continuing to drop means that if I bought bonds last week I’d be underwater right now - right? Or wait, is the yield going up and price going down? And what is basis points?
TMF is up yuge YTD.
Can someone ELI5 this to someone who doesn’t deal with this any day in their job?
A 10 yr government bond pays a whopping 0.73% per year.
And the fact that it’s historically low means what in a practical sense?
(Sorry for the dumb questions)
German housing market is crazy. Here the mortgage rates are between 1.5 and 2% but the buyer pays something like 15% closing costs. The net effect is that people can afford houses way above what you would think with their income, but they can’t afford to sell them because it takes forever to recoup that 15% unless the values go up and up. So the whole market gets crazy inflated, and people who bought apartments and then need to move for work or something end up keeping their apartment and renting it out,then renting in their new location rather than selling and buying.
There is no way they could raise rates a few percentage points without crashing prices and leaving most property owners way underwater, but the current situation causes an affordability crisis.
People look to bonds when the market bombs. Accounting for inflation, a 10-year bond has a negative real return. There’s no where good to run to and very little appeal to invest in a government bond right now.
This impacts a lot of other rates as well for savings accounts, mortgages etc. Someone else can probably explain it better than I can.
Also German situation is different than USA because their currency is shared with the rest of the EU. If the Euro was allowed to appreciate by raising rates it would screw over the weaker countries like Greece and Italy.
If people are willing to accept negative real returns on bonds the market as a whole is signaling they expect very little or negative economic growth for an extended number of years moving forward.
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And cash is worse than bonds in this scenario because?
Bonds at least pay nominal interest rates. Riverman is saying it’s just not enough to outpace inflation. Cash pays nothing.
Gonna buy some SPY at a discount and catch the falling knife. Hopefully stocks will be back up after a few years.