Could Fixed Rates Be Going Up? Or is it Another False Alarm?
Bond yields have recently spiked to a 3 month high and because of this there is speculation that fixed mortgage interest rates could rise. A few lenders in the market have already pushed there rates up a bit. If other lenders follow it should only be by about 10 basis points or .10% As mentioned in previous blogs I've wrote, when bond yields rise fixed mortgage rates usually rise too. This is because lenders and banks go to the bond market to raise funds to lend out. So if the lenders and banks have to raise their money at higher rates then this will eventually be passed on to those who borrower from them.
In a recent article featured in Canadian Mortgage Trends it was noted that fixed rates could be on the rise but that it could also be just another false alarm. Rates have been where they are for 3 years now. In fact they're even a bit lower. Economists are now forecasting that the Bank of Canada won't raise the Prime rate, which effects Variable rate mortgages, until late 2014. Always remember though fixed rates usually go up long before the Prime rate moves in the same direction.
As always if you have any questions or have any home financing needs please feel free to call or email me anytime.