Bond Yield for Tuesday August 25th, 2009
Toronto Interest Rates
Fixed 3year – 3.39%
Fixed 5year – 4.09%
Variable 5year- P+.30% (2.55%)
Variable 3year – P+.15% (2.40%)
Canadian 5 yr bond yields -0.06 bps to 2.56 – Four weeks ago it was 2.67%. The spread, based on 5 yr fixed rate mortgage of 4.29%, is at 1.73%.
Pressure on fixed 5 year: down
Financial Post – Markets
Lenders typically like to keep a NEW spread of 1.65% to 1.85% 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.
