North American bond yields have virtually collapsed. The 5-year Canada bond, for example, is down to 2.27% as of this writing. That's another record low.
InYourBestInterest's Hank Cunningham says, "the word 'bubble' is now in vogue to describe this massive rally in government bonds…" (For those who don't know, bond prices move inversely to yields, and fixed mortgage rates are closely linked to bond yields.)
30-day bankers' acceptance (BA) rates are also down. As of today they've dropped to 1.97%. That's just a touch above their 2002 low of 1.81%. (variable mortgage rates generally move with BA's)
Source: Bank of Canada (chart)
What does this mean for fixed and variable rates?
it means that banks are eating fat margins and haven’t passed on the savings
Couldn’t have said it better myself…
Till when can they still do that?! you think they will be forced to lower soon?
If you don’t like fixed rates, go variable. Your mortgage will be 0.25% to 0.5% cheaper on Dec 9th. Someone has to bare the risk of committing you a rate for the next 4/5 yrs…. if you don’t like paying the premium, maybe home ownership isn’t for you… go rent.
Both fixed and variable rates will continue to come down. 5 year fixed rates should be at 4% right now given bond rates. Banks cannot fool the public for much longer.