Most Canadian interest rates ended 2012 not far from where they began. That’s due, in part, to no rate changes by the Bank of Canada.
Likewise, investors found little economic justification to move long-term bond yields in 2012. (Bond yields influence fixed mortgage rates.) The result was that prime rate and 5-year mortgage rates essentially stayed put.
Here’s a look at how various other rates and publicly traded mortgage companies fared in 2012:
The rate that underlies all others in Canada is the overnight target. It has now been stuck at 1.00% for a record 847 straight days.
Further up the yield curve we have the 5-year government bond. In 2012, it posted its smallest annual yield change in five years.
As this table suggests, there weren’t many losers in the lending business this year. Let’s see what happens in 2013 with a possibly weaker housing market, escalating mortgage competition and the modest risk of a rate hike.
1 Discounted mortgage rates reflect estimates taken from lender rate sheets as of December 30, 2011 and December 31, 2012.
2 RBC’s 5-year non-redeemable GIC is used as a proxy for GIC rates. In reality, some lenders have to pay notably more on their GICs than RBC.