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Five-year mortgage rates set to fall right away, variable rate to stay steady: Kinch

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guest | 10 Aug 2011, 02:52 PM Agree 0

Long-term mortgage rates typically move in tandem with Canadian bond yields since banks borrow government debt to finance long-term home mortgages. Kinch, a Dominion Lending Centre mortgage broker, said that five-year mortgage rates should edge down in response to a 27-basis point drop in the five-year Canadian bond yield, which was at 1.51 as of Aug. 8. “My prediction is that you’re going to see within the next 24 to 48 hours interest rates for five-year mortgages reach the lowest point we’ve seen in history. If it does what I expect, you’d probably see five-year mortgages at 3.39% or 3.24%,” he told CRE Online, adding that the lowest five-year rate right now is 3.49%.Canadian bond yields followed the lead of U.S. Treasuries yields, which dropped after investors reacted to the news that the United States had lost its triple-A credit rating by pulling their funds out of equities to buy American dollars. Typically, when a government’s bonds are downgraded investors demand a higher yield to continue buying them. Strangely, however, the U.S., whose dollar is the world currency, saw the reverse effect. Variable mortgage rates, on the other hand, should stay the same, Kinch said. Global economic uncertainty and instability will likely prevent Bank of Canada Governor Mark Carney from raising the bank’s key interest rate, which is tied to the prime lending rate, even though he’s indicated several times he would like to raise it to cool inflation and prevent Canadian households from taking on too much debt. “The whole mess in the U.S. is not going to go away and it’s going to have a drag on the Canadian economy and even though Mark Carney is looking for a reason to raise interest rates, I don’t think he’ll find one,” Kinch said.
  • Sylvain Cote | 10 Aug 2011, 04:33 PM Agree 0
    Hi Sue & Dwayne,
    Here's an article I found this morning that I thought you'd be interested in.
    Take Care.
  • Jon Holland | 11 Aug 2011, 03:45 PM Agree 0
    ATB Financial has a 5yr Fixed rate of 3.09% and had this rate since 8th Aug. they also have 20/20 pre-payment privilieges and a 90 day rate hold
  • henrywhite | 07 Feb 2012, 08:40 AM Agree 0
    This year, personal property rates in the U.S. tumbled to record lows for the second week in a row. Freddie Mac states the brand new lows are the consequence of the economy growing at a much slower rate than many anticipated.According to Freddie Mac’s weekly Primary Mortgage Market Survey, 30-year fixed rate mortgages averaged 3.87 percent for the week ending Thursday, Feb.2. That is a drop from last week’s 3.98 percent, and a major fall from 2011?s 4.81 percent. Meanwhile, the 15-year fixed rate mortgage averaged 3.14 percent, dropping from 3.24 percent last week and 4.08 percent a year ago.
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