PrefBlog

These are great times for American mortgage borrowers, as long as they have jobs and aren’t underwater:

Mortgage prepayment rates have soared to the highest in seven years as homeowners take advantage of the lowest borrowing costs on record to refinance.

Home loans were repaid in August at a pace that would erase 25 percent of the debt in a year, according to Lender Processing Services Inc. (LPS), a Jacksonville, Florida-based data provider that tracks 40 million mortgages.

The cost of 30-year loans dropped to 3.4 percent last week, helping push refinancing applications to a three-year high, after the Federal Reserve said it will buy $40 billion of mortgage securities per month to stimulate the economy. That followed government efforts to increase refinancing with new rules designed to expand eligibility and reduce costs.

If the feds insist on coddling an expensive flag-carrier, Canadians know what to do:

The Conference Board of Canada report says about five million Canadians now cross the U.S. border by land every year to fly out of American airports.

It says higher airfares and fees and taxes in Canada, as well as differences in wages, aircraft prices and industry productivity makes it 30 per cent cheaper to fly out of the U.S.

We want unilateral open-skies, now!

It was a dull day for the Canadian preferred share market, with PerpetualPremiums up 2bp, FixedResets gaining 1bp and DeemedRetractibles down 4bp. Volatility was average. Volume was average.

PerpetualDiscounts (all four of them! from both issuers!) now yield 4.87%, equivalent to 6.33% interest at the standard conversion factor of 1.3x. Long Corporates now yield 4.2% (!) so the pre-tax interest equivalent spread is now about 215bp, unchanged from the September 26 report.

This entry was posted on Wednesday, October 3rd, 2012 at 10:32 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.