After fixed mortgage rates sat at a record low level for the past six months, it was inevitable that they would rise once again. The cause for this was the rise in Canadian Bond Yields, which was triggered two weeks ago. This was caused by a selloff in the Bond market due to The Federal Reserve indicating that they may slow down on the bond purchasing they have being doing to bring liquidity into the markets. Nothing has actually happened yet and it may not even happen but the speech was enough to cause a selling frenzy.
We are in volatile times with the recessions still in place around the world, so any information coming from the powers that are hints of a possible economic change, will cause changes in the markets over the short term. There are signs of a economic recovery and the Federal Reserve speech had touched on this as well.
The Bank of Canada’s overnight lending rate has not changed, which effects directly the prime or variable rate and overall rates long term.
So to break it down the spike in rates over the past two weeks will settle down again. Remember five years ago a discounted 5 year fixed was close to 6.00%. Even with this current rate increase the 5 year fixed is still under 3.50% and variable averaging 2.65%. ”
Have a great weekend and Happy Canada Day!