Will 5 year mortgage rate cuts work?

[slyjohn]

In this case I just don't think that third time is a charm. This might have worked back in 04 and 06 but it doesn't seem like people want the reduced 5 year mortgage rates because they want floating rates.

[Moor4Me]

Whats the advantage of floating rates over a 5 year mortgage rate cut? And if there are advantages, why do they keep doing the same thing?

[Paolo32]

I dont think 5 year fixed rates are a good idea, you pay such high penalties if you want to break the loan during that time. There are no fees to alter a floating loan and you can usually make as many extra payments as you like without penalty which you cant with fixed loans.

And right now the floating rates are really attractive compared to fixing so that's way I would go.

[gazza]

It all comes down to supply and demand, if no one wants to take on a 5 years contract the price will keep falling until it becomes viable to have again.

[iconic]

I dont think 5 year fixed rates are a good idea, you pay such high penalties if you want to break the loan during that time. There are no fees to alter a floating loan and you can usually make as many extra payments as you like without penalty which you cant with fixed loans.

And right now the floating rates are really attractive compared to fixing so that's way I would go.

Yeah, I agree with you. Most people likely choose floating loans especially now that we are suffering economy recession.

[sonnyy]

When the economy goes back up, the 5 year fixed will be more attractive and comfortable for people. right now, the want the securities that a float offers.