The surprise Donald Trump US election win has caught many off-guard. The pollsters have been quiet to comment after they all predicted a Clinton win.
Here’s what week 1 looks like, after the Trump win. The first few days saw some chaos in the stock market. Stock market went down and so did Govt of Canada bond yields.
However within a day, the stock market began to rise. The Dow Jones hit all time record highs. The Toronto market was up also, but not as much as the US. The Canadian $ took a bit of a beating. And the Govt of Canada bond yields started to rise. This last one is important to watch.
Fixed mortgage rates are closely tied to govt of Canada bond yields. We’ve now seen Bond yields increase by over 0.35%. that’s a huge increase in such a short period of time. Banks and Mortgage Lenders have begun to increase fixed mortgage rates.
Investors are betting on Trump stimulating the US economy and taking no foreign prisoners. That’s caused some jitters in the markets. I’m watching the markets closely. This could just be a short term reaction. Or, it could be an adjustment to the record low mortgage rates.
MY VIEW… Continue reading “Unexpected Trump win on Canadian mortgage rates and market.”
Fixed mortgage rates are tied closely to the Govt of Cda bond yields. And bond yields are up… Since mid April, the 5 yr Gov of Cda bond yield has gone from 0.75% to 1.07%. That’s a 0.32% jump. Normally, we would see fixed mortgage rates go up.
So far, no increase. But that’s probably more to do with a competitive Spring housing market. This is when most house sales and mortgage transactions take place. The Banks need to maintain certain market share levels in order to keep shareholders happy. They are willing to sacrifice a little profit margin (and I do mean little… they seem to make up for this with higher service fees as was recently reported, but let’s not get into that now…).
If the bond yields continue to increase, we will see fixed mortgage rates rise. That’s an automatic. The real question is how long will the bond yields continue their climb? It will be interesting to watch the next few months. We can expect to see some rate increases as the Spring market ends and Banks look to increase their profit…. A pattern that repeats itself year after year.. but here’s what you can do to protect yourself… Continue reading “Bond Yields are up… will Fixed Mortgage rates follow?”