Various happenings from around the rate world…

In the Credit Market

• The 30-day banker’s acceptance (BA) yield–which usually drives variable-mortgage rates–fell to 0.90% yesterday.  That’s the lowest BA yield ever. The prime – BA spread is now a much healthier 2.10%. (The 10-year average is 1.69%.)  Will this translate into lower variable rates? Or will lenders hold firm in anticipation of prime rate falling on March 3?  We’ll have to wait and see.
• 5-year bond yields popped up to 2.14% yesterday. That’s the highest they’ve been in almost two months. [5-year bonds influence fixed mortgage rates]
• The TED spread continues to glide lower–suggesting that perceived global credit risk is easing further.

Mortgage Rates of Note

• The benchmark 5-year discounted fixed rate is now 4.39%. Several lenders are below this for quick closes however.
• The benchmark 5-year closed variable rate is now 3.80% (prime + .80%). There are a handful of lenders below this rate as well.
• You can still find capped variables at 4.00% (prime + 1.00%). The maximum risk with a capped variable (if prime rate rises) is currently about 5.79%.
• BMO has raised its open variable rate to prime + 1.50% from prime + 1.00%.  RBC and TD are still holding at prime + 1.00%. Scotiabank still hasn’t reinstated its open variable and much to the frustration of brokers, CIBC/FirstLine (the biggest broker lender) is also still at prime + 1.50%.
• If you’re not adverse to an open HELOC (instead of an open variable), you can find HELOCs at prime + 0.75%.
• BMO has launched a new 5-year variable at prime + 0.80%.
• Canadian Tire was unfortunately forced to raise rates on its HELOC…finally.  They had a good run and held out for a few months while other lenders were at prime + 1.00%.  At prime + 0.75%, CT is now on par with the Manulife One.  Unlike Manulife’s rate move last October, CT’s higher rate did not affect existing customers.

Last modified: April 29, 2014