The recent volatility in the financial markets have left many Americans feeling jittery.The Dow and S&P indexes suffered some of their worst losses of the year last week, and a shocking price move in the bond market sent the benchmark 10-year Treasury yield below 2 percent, the lowest level in over a year. U.S. oil prices also dropped below $80 a barrel, a two-year low.
But there is some good news. The significant decline in energy prices and bond yields could actually prove to be a silver lining for many Americans, helping to cut mortgage, transportation, and heating costs in the coming months.
Plunging mortgage rates
Falling Treasury yields pushed mortgage rates this week to lows not seen in over a year. The rate on the 30-year fixed mortgage fell below the psychologically significant 4-percent level. "Lower mortgage rates will benefit both homebuyers as well as anyone who bought a home in the past few years who can now look at refinancing," said Greg McBride, chief financial analyst at Bankrate.
For example, on a $250,000 loan, McBride said a drop in the rate on a 30-year mortgage from 4.25 percent to 4 percent would reduce a borrower's monthly payment from $1,229 to $1,193, resulting in a savings of $36 a month. That may not seem like much, but it adds up to $432 in savings over 12 months. A more dramatic decline in 30-year mortgage rates to 3.75 percent would bring that monthly payment down to $1,157 a month, resulting in monthly savings of $72 and nearly $900 over one year.
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