As fixed mortgages with rates less than 5% are becoming a thing of the past, sentiment among economists is at least one more Bank of Canada rate hike, likely on July 12, with any chance of rate cutting not happening for a year..Canada Mortgage Trends (CMT) reports “Rates under 5% are quickly becoming a distant memory. Many lenders, including a number of the Big 6 banks, started hiking rates earlier this week following fresh highs in the Government of Canada bond yield, which typically leads fixed mortgage rates.”.Bond yields have a direct impact on mortgage rate. As yields increase, so do mortgage rates..Last Monday, the five-year bond yield closed at 3.76%, going to an intraday high of 3.84% on Tuesday, approaching highs last seen in November, says CMT..Data from MortgageLogic.news shows the lowest nationally available deep-discount fixed mortgage rates have increased between 15 and 35 basis points (bps) since the beginning of the month, mirroring the 25-bps rate hike for variable-rate borrowers, due to the Bank of Canada’s quarter-point rate hike last week.. Among the Big 6 Banks, the lowest high-ratio five-year fixed posted rate, which was available from TD Bank earlier this month, has since jumped by 30 basis points to 5.19%, says CMT..“Today’s fixed mortgage rates now reflect the higher-for-longer view,” Integrated Mortgage Planners broker Dave Larock wrote in his latest blog post. “For now, the bond market has capitulated to the Bank of Canada.”.“The recent spike in Government of Canada bond yields now has them priced on the assumption that the BoC is likely to hike its policy rates again before the year is out,” wrote Larock. In turn, that surge introduces the possibility of some near-term give-back (as is often the case after a big move)..“That should hold fixed mortgage rates steady at their new, higher levels for the time being.”.That’s unless bond yields approach the next resistance level, around 4%, says Ryan Sims, a TMG The Mortgage Group broker and former investment banker..“I would think if we close above the 3.6% level to end the week there is a pretty good chance it tries for the 4% range,” he told CMT..The latest hikes have made fixed mortgage rates under 5% a dying breed, tweeted Ron Butler of Butler Mortgage. .“Every rate will probably start with a 5, and some with a 6, by next week,” wrote Butler, recommending anyone in the market for a mortgage act to get a rate hold right away..Sims agrees..“I think if a person was to get one, they should jump on it,” he said. “By next week, assuming bond yields close the week where they are now, we will see more hikes to fixed mortgages rates, nothing major, but 5 and 10 and maybe 15 bps here and there.”.Larock believes the safest pick, “and who wants to aim for the middle of the fairway,” is a three-year fixed..“While that may entail paying an above-market in the latter part of the term, it’s a trade-off some borrowers will be willing to make given the alternative options,” he said..“The alternatives are even longer terms, which exacerbate that risk, or variable rates and shorter-term fixed rates, which seem to be rising inexorably.”
As fixed mortgages with rates less than 5% are becoming a thing of the past, sentiment among economists is at least one more Bank of Canada rate hike, likely on July 12, with any chance of rate cutting not happening for a year..Canada Mortgage Trends (CMT) reports “Rates under 5% are quickly becoming a distant memory. Many lenders, including a number of the Big 6 banks, started hiking rates earlier this week following fresh highs in the Government of Canada bond yield, which typically leads fixed mortgage rates.”.Bond yields have a direct impact on mortgage rate. As yields increase, so do mortgage rates..Last Monday, the five-year bond yield closed at 3.76%, going to an intraday high of 3.84% on Tuesday, approaching highs last seen in November, says CMT..Data from MortgageLogic.news shows the lowest nationally available deep-discount fixed mortgage rates have increased between 15 and 35 basis points (bps) since the beginning of the month, mirroring the 25-bps rate hike for variable-rate borrowers, due to the Bank of Canada’s quarter-point rate hike last week.. Among the Big 6 Banks, the lowest high-ratio five-year fixed posted rate, which was available from TD Bank earlier this month, has since jumped by 30 basis points to 5.19%, says CMT..“Today’s fixed mortgage rates now reflect the higher-for-longer view,” Integrated Mortgage Planners broker Dave Larock wrote in his latest blog post. “For now, the bond market has capitulated to the Bank of Canada.”.“The recent spike in Government of Canada bond yields now has them priced on the assumption that the BoC is likely to hike its policy rates again before the year is out,” wrote Larock. In turn, that surge introduces the possibility of some near-term give-back (as is often the case after a big move)..“That should hold fixed mortgage rates steady at their new, higher levels for the time being.”.That’s unless bond yields approach the next resistance level, around 4%, says Ryan Sims, a TMG The Mortgage Group broker and former investment banker..“I would think if we close above the 3.6% level to end the week there is a pretty good chance it tries for the 4% range,” he told CMT..The latest hikes have made fixed mortgage rates under 5% a dying breed, tweeted Ron Butler of Butler Mortgage. .“Every rate will probably start with a 5, and some with a 6, by next week,” wrote Butler, recommending anyone in the market for a mortgage act to get a rate hold right away..Sims agrees..“I think if a person was to get one, they should jump on it,” he said. “By next week, assuming bond yields close the week where they are now, we will see more hikes to fixed mortgages rates, nothing major, but 5 and 10 and maybe 15 bps here and there.”.Larock believes the safest pick, “and who wants to aim for the middle of the fairway,” is a three-year fixed..“While that may entail paying an above-market in the latter part of the term, it’s a trade-off some borrowers will be willing to make given the alternative options,” he said..“The alternatives are even longer terms, which exacerbate that risk, or variable rates and shorter-term fixed rates, which seem to be rising inexorably.”
