Surge in bond yields
Another quiet Christmas week in the mortgage market.
This week in mortgage-land, not a creature is stirring, not even a lender. Canada’s lowest mortgage rates held rock steady.
The fact is, mortgage rates seldom change over the holidays and this was no exception. And that’s welcome news given the surge in bond yields over the past two weeks.
The five-year bond yield, which often leads five-year fixed rates, is up 44 basis points since Dec. 15. (A basis point is one-hundredth of a percentage point.) Investors are worried that inflation isn’t coming down quickly enough and that China’s post-COVID reopening may add further price pressures.
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The next Bank of Canada interest rate announcement is Jan. 25 and derivatives markets are pricing in a better than even chance the bank will hike another 25 basis points. That would take the prime rate up to 6.7 per cent, its highest level in more than two decades.
Robert McLister is an interest rate analyst, mortgage strategist and editor of MortgageLogic.news. You can follow him on Twitter at @RobMcLister.