Bond Yields Dropping: Fixed Rates Still High

<p>Over the last few weeks, we learned that inflation numbers in the US dropped a bit. The market had its rally and bond prices dipped, but are we out of the woods yet? Banks’ fixed rates are still high and we have inverted yield curves. Have a listen to this episode to learn what this means for the short and long-term future of the economy.</p> <p>3 key takeaways from this episode are:</p> <p>1.     Through good times or bad, banks keep their shareholders in mind.</p> <p>This is their obligation, so don’t take it personally. Even though bond yields have declined, banks still have high fixed rates. They can justify it by saying the added amount is to ensure protection against market instability, but it’s still extra profit when those earnings reports come out. People who work at banks also don’t have to have mortgage training. That’s another cost the banks will save because they can. What should consumers do with this information? Don’t do all your business with one bank and use a mortgage broker to get you the best rate. By going to other institutions, you are showing your bank that you are knowledgeable about the other options out there. They want to optimize earnings, but they don’t want to lose you. And by going to a mortgage broker, you are getting a trained professional IN THAT FIELD who will work to get you the best product for you.</p> <p>2.     The best way to make money in the market is to deploy capital when prices are low and others are fearful.</p> <p>Investors make money when they buy at good prices. There is no way of knowing when assets are at good buying points, but the economy tends to swing on a pendulum that favours the positive side. If you have a long-term time horizon, you should consider buying assets anytime the economy swings down because in the long run, you’ll make money when the pendulum swings again. This may not apply to all assets and all economic situations, but it is worth considering if you ever had your eye on an asset and you see it discounted due to tough conditions.</p> <p>3