Mortgage for Change Blog

We are seeing fixed rates continue to rise this week with the current best 5 year at 4.50% (available for rate hold - quick close specials are slightly lower).

Today's Financial Update:

• TSX -69.85  fell for a second straight day as worries over Europe's fiscal troubles outweighed a brief shot in the arm provided by a more upbeat U.S. Federal Reserve outlook.  Spain was hit by a credit rating downgrade, following downgrades to Greece and Portugal on Tuesday
• DOW +53.28 to 11,045 after the U.S. Federal Reserve left interest rates unchanged near zero and offered a brighter economic view. The U.S. central bank renewed its promise to keep rates low for an "extended period" and said U.S. consumer and business spending were picking up steam.
• Dollar +.86c to 99.13cUS   
• Oil +$.78 to $83.22US per barrel.  
• Gold +$9.60 to $1,171.80 USD per ounce  
• Canadian 5 yr bond yields +.06 to 3.08. The spread is back in the high end of the comfort zone expect rate increases. 
  
  http://www.financialpost.com/markets/market-data/money-yields-can_us.html?tmp=yields-can_us

The rate of return on your bond, can be read through a yield curve, If the increase in bond yield  continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise. Currently lenders are looking for a spread between 1.35 and 1.60

Are Big Banks jumping the gun?

Rob Carrick
The Globe and Mail Published on Thursday, Apr. 29, 2010

Interest rates are rising – we all get that – but it looks like the Big Banks are pushing things a bit with mortgages.

After a pair of increases in the past two weeks, the posted Big Bank five-year fixed mortgage rate now stands at 6.25 per cent. Does that seem high? In fact, it’s just half a percentage point below the average level for the past decade.

We’re supposed to be in the early phase of what could be a long cycle of rate increases. The Bank of Canada hasn’t even started raising its overnight rate, which sets the trend for borrowing costs other than fixed-rate mortgages. The overnight rate could very well start rising June 1 (that’s the central bank’s next rate-setting date), but even then it’s not dead certain that rates will move.

Mortgage rates are linked to bond yields, which have been rising for a while now. But mortgage rates have been moving faster. full story