Rate Alert



5-year bond yields have jumped to 2.27%–up 40 basis points in the last 30 days.  As a result, mortgage funding costs are spiking (fixed mortgage rates are generally linked to bond yields).

A few smaller lenders have already raised, or plan to raise, their 5-year fixed rates.  As reported a few weeks ago, this may be a precursor to further, more wide-scale, rate increases.
5-year_bond_yields-20090521

If you’re a homeowner considering refinancing into a fixed rate, now may be the time to act.

If you’re a broker floating a fixed rate for a client, you may want to consider locking it in.

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Attribution: Special thanks to the Bank of Canada for the data used in this chart.

The Mandatory Disclaimer:  Accurately and consistently forecasting interest rates long-term is virtually impossible. This is not a prediction or recommendation.  Market conditions can change at any time. Contact a mortgage planner for recommendations suitable to your particular circumstances.

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Comments

  1. Comment avatar

    Canadian Mortgage    

    It’s worth noting that a few lenders have actually been lowering their rates in the last few days. So we’re getting some crosscurrents here. The lenders who are reducing their pricing are not the lenders with the best rates, however.

     
  2. Comment avatar

    Canadian Mortgage    

    It’s good to see that rising yields haven’t prevented ING and First National from lowering their rates today. Both lenders are now at a 1.50% spread above the 5-year bond yield.

     

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