TD raises fixed rates 0.25%
With Bond yields up over 30bps in one week, TD appears to be the first to raise fixed mortgage rates.
TD’s new posted 5 year fixed rate is 5.44%. We can expect other banks to follow. More details to follow.
Banks slow to lower rates…but quick to raise them
Some things never change…..On Oct 19th, 2010, the 5 year Canadian Bond yield was 1.85%… It fluctuated up and down but staying below 2.00% until Nov 5th when it closed at 2.053%… We were expecting the Banks to adjust their Fixed rates downward but it didn’t happen..
Since then, it has kept above 2.00% and is currently at 2.27%…. This increase in the Bond yield usually means Fixed Mortgage Rates will go up.. See the chart here.
But earlier this week, the Big Six Banks lowered their posted 5 year mortgage rate to 5.19% from 5.29%… This is just a delayed reaction the low bond yields.. but it just goes to show that the Banks continue their pattern of reacting slowing to lowering rates but move like Formula 1 race car to raise rates..
Of course, Posted Mortgage Rates really don’t mean much as the Wholesale Market or Broker Market deals with the true rates.. And Fixed rates dropped late last week to their lowest levels ever. … 5 year fixed rates are now at around 3.49%… with some Lenders even offering 3.39%… WOW!
Watch for Fixed rates to move upward slightly as the Bond yield is now high enough to warrant an increase…
Bank of Canada takes a pause with rate hikes
Bank of Canada governor, Mark Carney, held the Target Rate steady today…as expected… Concerns about the U.S. economic recovery stalling, the Global economy and our own domestic economy were mentioned in the Press Release.
In the press release, the Bank said inflation was not a concern as it is under the 2% target. Take all this data and it spells UNCERTAINTY.
What’s also interesting is that the Bank has adjusted it’s forecast for growth downward for the next 2 years…Great news for those in a Variable rate… Variable rates are hovering around 2.30% these days.
This makes the Variable Rate product that much more attractive…even with 5 year fixed rates in the 3.59% range.
Experts believe the rate will remain steady throughout next Spring and possibly into Fall depending on inflation and Global and domestic economic data….
More speculation that interest rates will remain low
We’re starting to see more evidence that the recovery is not going as well as the Bank of Canada first thought. Inflation has dipped slightly, even with the HST.
CIBC Chief Economist, Avery Shenfeld, says we are beyond the ‘Great Depression of 2008-09 but we are in the ‘Great Disappointment’ of a sub-par recovery. He’s forecasting for interest rates to remain flat until the spring of next year, followed by only gradual increases thereafter.
Great news for anyone that has a mortgage…
Mortgage Rate history…25 year chart
Here’s an updated 25 year Interest Rate Chart. The chart gets updated monthly by Firstline Mortgages, a division of CIBC. Click here to see the data.
The only surprise is that interest rates didn’t go up as many experts had predicted last year and earlier this year… To sum up why in just one word……UNCERTAINTY….. there is a lot of uncertainty about he global recovery and the domestic economy…. watch for interest rates to stay fairly flat through the rest of 2010….