Canadian Mortgage Rates May Resume Climb As Bond Yields Surge
Canadian real estate buyers have been motivated by falling mortgage rates, but that may change soon. Government of Canada (GoC) 5-year bond yields have been climbing sharply. The yield, which helps determine the cost of 5-year fixed rate mortgages, had been falling over the past few months, delivering relief to buyers. Over the course of just a few days, rising inflation expectations have sent bond yields soaring once again.
Canada Has Seen Yields Fall & Lower Costs Over The Past Few Months
Cooling inflation and expectations of rate cuts have helped to trim bond yields significantly. The 5 Year Government bond yield had a peak market close of 4.41% back in the beginning of October. Shortly after it tumbled as low as 3.17% at the end of the year, more than a point in just a few short weeks.
Consequently, it was believed mortgage rates had peaked. The 5-year fixed rate mortgage adjusted with a more than 1 point decline. Most economists don’t expect a higher overnight rate either, they’re forecasting cuts. At the start of the year, it seemed extremely unlikely that mortgage rates would move higher. A slightly different picture is emerging now. …[Continue Reading]