Bond Yields for Friday August 21st, 2009
Toronto Mortgage Interest Rates:
Fixed 5 year – 4.09%
Fixed 3 year – 3.39%
Variable 5 year- 2.55% (effective rate)
Variable 3 year – 2.40% (effective rate)
Canadian 5 yr bond yields -0.03 bps to 2.49 – Four weeks ago it was 2.65%. The spread, based on 5 yr fixed rate mortgage of 4.29%, is at 1.80%.
Pressure on fixed 5 year: Down
Financial Post – Markets
Pressure on fixed 5 year: Down
Financial Post – Markets
Lenders typically like to keep a spread of 1.80% to 2.00% between their fixed five year rates and the current 5 year bond yield. If the bond yield increases then the spread will shrink putting upward pressure on mortgage interest rates. The reverse is also true. If bond yields decrease then the spread widens and there is downwards pressure on fixed rate mortgages.
