You may wish to lock in your mortgage now and enjoy the great rates that are available
Fixed Mortgage Rates Are Going Up!
Major banks like RBC have already increased their 4 and 5 year fixed rates by .35%.
And other banks will follow the same steps in the coming days due to the increase in the 5 year bond yield.
There's now a much higher probability we won't see today's insanely low fixed rates again for a while.
Many mortgage companies have Fixed Rates that are still low, its a good time for you to do pre-approval and to hold the rate before it goes up.
Here's an example of a current rate sheet.
Variable rate at Prime minus .10%= 2.15%
5 year fixed at 3.79%
4 year fixed at 3.59%
3 year fixed at 3.39%
WHY IS FIXED RATE GOING UP?
The 5-year bond yield is soaring over 23 basis points, to 2.81%! It's the biggest jump in bond rates in over a year and it comes on top of strong gains over the previous few days.
The yield is now near an 11-month high, and that means fixed mortgage rate increases are around the corner.
What's behind all this?
Today's positive employment report is the big driver. It caught the bond market totally off guard.
Here's what analysts are saying:
National Bank: "With the recession over in the labour market and the biggest decrease in the unemployment rate since November 2005, our call for a rate increase by the Bank of Canada in the first quarter of 2010 remains on track." (Globe)
Scotiabank: "...It will feed growth prospects and inflation fears and raise market concerns regarding the BoC's conditional rate commitment." (National Post)
RBC Economics: "...At 8.4% the unemployment still implies considerable slack in this economy. This provides reason for the Bank to maintain its commitment to a 0.25% policy rate until mid-2010." (National Post)
TD Securities: "We believe that it will certainly lead the Bank of Canada to focus on the timing of future interest rate increases set out in its conditional commitment to hold interest rates at the current level until Q2 2010. Nonetheless, while for now we continue to expect the policy rate to remain unchanged until Q4 2010, we think that the risks of an earlier move have increased dramatically." (Globe)
I hope this finds you Happy and Healthy!
All the Best!
A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate
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