Five-year rates of 2.99% or less were the talk of the market in 2013. That is, until the U.S. economy accelerated, taper threats spooked the bond market and yields soared one point in four months.
And climbing fixed rates weren’t the only thing making mortgages less accessible in 2013. The Finance Department decided to tighten its collar around housing even further. The goal: to brake housing’s momentum and reduce Ottawa’s exposure to mortgage risk.
Those and other headwinds marked an eventful 2013. Here’s a rundown of the year’s top stories, rate movements and mortgage-related stocks.
The foundation for most Canadian rates is the overnight target rate. It ended the year where it began, at 1.00%. The Bank of Canada hasn’t changed it for 1,213 straight days.
The most important benchmark for fixed-rate pricing is the 5-year government bond, and in 2013 we were reminded of how fast 5-year yields can climb. Its one-point move from May to August was enough to motivate thousands of Canadians to rush into the housing market, to avoid potentially higher rates later.