Fixed Rates increase for the second time in 2 weeks..

Royal Bank increased their fixed mortgage rates again by 0.25%….that’s an 0.85% increase in 2 weeks…  Scotiabank increased their rates shortly afterwards.    We can expect the other Major Banks to follow this latest increase.

What’s interesting about this move is that the bond market has not increased by the same amount…. On February 15th 2010, the 5 year Bond yield was 2.53%…today, it’s 3.08%….Mortgage Lenders and Banks want to earn a 1.20% to 1.30% spread in the wholesale mortgage market… Today’s best 5 year fixed rate mortgage is 4.39% but will increase to around 4.64%….  That puts the spread all the way up to a whopping 1.56%.

By the way, not all Lenders have increased their rates… there are still Lenders with rates in the 4.39% range but we should expect them to follow suit…