When bond yields go up, fixed rates often follow. That’s because fixed-rate mortgages are financed in the credit market.
In the last 10 days, bond yields have jumped almost 1/4%. It’s no surprise then that the big banks are now hiking their fixed rates by up to 1/4%.
The talk among economists now is that the Bank of Canada won’t be lowering rates anytime soon. In fact, our economy looks quite robust and some “experts” speculate that fixed rates could move up again before long.
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Sidebar: It’s always funny to see the big banks advertise “special offer” rates (as in the link above). Their special offers are typically far above the rates accessible to mortgage planners. It makes us wonder the same thing every time: What’s so special?
That’s funny, because Canequity.com was runnig a special for the week doing a 5 year fixed at 5.69% which is 0.10% off of their regular rate. I wonder if they will be up to 5.89% after the special is over.
Just for the record Traciatim, most high volume brokers have access to that same 5.69% rate. That means probably 1% or 2% of all brokers in the country. I’m not sure if I would call it a “special.”
If that rate is through the lender I think it is (Firstline) it will be gone Monday because Firstline is raising their rates.
That leaves Alterna as the low rate provider at 5.65%. Avoid Alterna though unless time is no factor. They are slow slow slow in processing applications. Plus they ask for every document under the sun.
Dean
It’s very interesting how quickly things change. My own mortgage is through Firstline and I only closed in April. My interest rate is 5.09% for 5 years. So far for this period it looks like I made the correct decision on locking in, I guess we will see in 4 years 6 months.
Hi Traciatim,
You’re absolutely right. The market adjusts suprisingly fast to changing economic variables.
Like most mere mortals I have absolutely no idea where rates will be by the end of your term. Yet, if someone had the proverbial gun to my head, I’d bet you made a good decision. Canada’s resource-based economy is just so solid. It’s hard to imagine the Bank of Canada lowering rates by any significant degree in the forseeable future.
If it weren’t for U.S. economic troubles, a strong loonie, and historical studies that support variable rates, locking in (even at today’s rates) would seem the hands-down choice.
– Melanie