An additional financial benefit is that we lopped a few years off the end of our mortgage term.
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Mrs Maw said she had remortgaged the family home in Barnsley by extending her mortgage term by five years.
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Many on interest-only mortgages now face the prospect of a sudden, dramatic rise in payments, as they start paying off the capital, when their mortgage term ends.
By the middle of the 1990s, it became obvious that these expectations were overblown and that the endowments would not cover the final sum at the end of a 25-year mortgage term.
They have offered for me to make a one-off lump sum payment to bring the account up to date or to extend my mortgage term, but this does not alter the fact that it is their error that will now impact on my finances.
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Mortgage REITs, which use short-term debt to buy longer-term mortgage securities, also are at the greatest risk if interest rates rise because that would increase their short-term borrowing costs and cut the value of the mortgage bonds that they hold, possibly resulting in losses and reduced dividends.
Mortgage REITs borrow short-term or adjustable-rate money (the federal funds rate has plunged from 6.5% in January to 3.5% today) and use it to buy longer-term mortgages or mortgage-backed securities, playing the spread between the two sets of interest rates.
Interest rates will not fall further in 2013, and long-term mortgage rates may rise late in the year.
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By lowering long-term mortgage rates, for instance, it has boosted the housing market.
Dr. KARL CASE (Wellesley College): What really determines the long-term mortgage rate is some combination of inflationary expectations, international demand, the value of the dollar.
The Federal Reserve, having lowered short-term interest rates in effect to zero, has intervened in bond markets to push down long-term mortgage rates as well.
Under the new approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up the money by borrowing it back for short periods at low rates.
Given the weak jobs report released in early September, there is a strong likelihood another round of quantitative easing is imminent and the Federal Reserve could elect to purchase long-term mortgage securities this time around.
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Well, because one of the major downsides of buying a house is that your equity is locked up in it and you have this very long term mortgage contract that its hard to get out of.
Since most mortgage payments are pegged to short-term interest rates, Norwegian mortgage-holders will be clobbered almost immediately.
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The Federal Reserve is purchasing long-term Treasurys and mortgage-backed securities in an effort to lower interest rates and cut unemployment.
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That is a huge amount over the remaining term of the mortgage.
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When the Federal Reserve Open Market Committee met in June, more bond purchases to push down long-term Treasury and mortgage rates were already on the table.
If plans are long term, eventually the mortgage will be paid off and the home will be worth something.
Last month Dublin ordered banks to provide long-term solutions to struggling mortgage holders, prompting some concerns about the danger of "moral hazard".
If we want to retain the long-term fixed-rate mortgage, it makes sense to recognize up front that there might be times when it is costly, do our best to develop fees to largely cover such potential costs, and try to put private sector entities in first loss positions before taxpayers bear any cost.
So, to balance their portfolios, large mortgage investors have to sell long-term debt.
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"These are still fantastic long term value, " said mortgage broker Simon Tyler.
Rising expectations that the Fed will pump more money into the financial system through additional purchases of long-term bonds, such as mortgage-backed securities, helped fuel a 1.1% increase in gold prices Wednesday.
He seemed to agree that QE1 and QE2 did not result in the additional liquidity going directly into jobs and the economy, and QE3 may not either, but that it will hopefully lower long-term interest rates, including mortgage rates, and possibly increase asset prices.
"To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities, " the FOMC says, adding it will continue to roll over the Federal Reserve's holdings of Treasury securities as they mature.
There could be trouble ahead for another increasingly popular yield vehicle, mortgage REITS. If the Fed implements Operation Twist and buys long-term bonds to flatten the yield curve, that could hurt leveraged investors in mortgage-backed securities two ways.
It is long-term bond yields, and the mortgage rates allied to them, that give the economy its tempo.
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