More Rate Drops

We saw a nice tumble in fixed rates last week.  Mortgages from one year to five years dropped anywhere from 0.10% to 0.20%.

GoC5-year

That's pushed rates for most terms even further into record territory.  It's the first time, for example, that we've seen under 3% on a 1-year fixed. 

On the other end of the curve, 5-year rates at non-bank lenders are now commonly in the high 3% range for 30-day closes, with a few lenders even offering 90 to 120-day rate holds at those prices.

Decreasing risk premiums in the mortgage securitization market and a depressing economic picture continue to drive fixed rate declines.  Among the headlines, we're hearing BoC chief, Mark Carney, tell us that Canada just posted it's worst quarterly economic performance in 48 years.

Normally, news like that might drive down bond yields even further (government bonds generally lead fixed mortgage rates).  But interestingly, yields are staying in a horizontal trading range that's lasted 2 1/2 months.  The bond market seems to be saying, "We know things are bad and we've already factored that in." 

In coming days people might start focusing more on the 2% to 2.15% range on the 5-year bond chart.  If yields start pushing up through those levels there's a fair chance fixed rates could follow higher. 

In the meantime, the party continues for homeowners as borrowers toast more historically-low fixed mortgage rates.

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