Yields hit new lows
Plenty of feedback and questions about 'when interest rates go up again' and the mortgage rate buffer.
An interesting point of note is that as and when interest rates do go up again, a buffer of 2½ percentage points would actually constrain the capacity to borrow (should the proposed rules remain in place, which they may not).
But that's not something that's going to happen any time soon in any case.
Of course, we all agree it is important to allow for changes in circumstances.
Which is, after all, what the buffer is for.
But you also need to look at the likelihood of 250 basis points of hikes, which - as market pricing shows - over the near term is effectively zero.
Meanwhile bond yields across the curve have continued to decline to their lowest ever levels.
Source: Bloomie
The 5 year bond yield is just 1.23 per cent, while the 10 year bond yield is at a record low of just 1.58 per cent.
Heck, even the 15 year bond yield is only at 1.85 per cent, so the squawking about rate hikes should be put into a bit of perspective.
Or, looked at graphically.
An interest rate buffer of 250 basis points is very prudent, all things considered.
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Addendu,: further declines in yields overnight.
