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1946: An Analogue to Today’s Rate Market?

What do interest rate cycles of the past say about rates today? CNBC recently interviewed noted Wall Street technical analyst Louise Yamada and asked her that same question. If you’re a chart and market history geek, her answers will be of interest: On the length of cycles Interest rate cycles have typically lasted for decades, from 22 to 37 years. “The reversals from rising...

Mortgage Insurance Costs Rise…Again

Buying a home with less than 20% down? The government’s about to milk you for a few more grand. Come March 17, CMHC is boosting its default insurance premiums for the third time in three years. Here’s what they’re rising to, based on down payment size: Less than 10% down:                           +0.40% to 4.00% Between 14.99 and 10% down:         ...

How Long Can Rates Stay Up?

Trump’s battle-cry has been “jobs, jobs, jobs,” and that’s had bond traders screaming “sell, sell, sell.” Why? Because a Trump-pumped economy suggests: more U.S. government borrowing (greater bond supply is bullish for rates) more business and consumer borrowing (higher demand for money is bullish for rates) more inflation risk (a haunting thought for bond investors, and bullish for rates). Meanwhile, the world’s monetary kingpin, Janet Yellen, says the U.S. labour market...

Don’t Count the Divergence Before it’s Hatched

Canadian rates will follow their own path. Our economy isn’t sturdy enough to track U.S. rates higher…for long. Economists have been singing that tune for months now. And yet, Canada’s closely watched 5-year yield and its American cousin (the U.S. 5-year note) are moving together like train tracks. Why aren’t Canadian rates diverging more from U.S. rates? Technical factors aside, maybe the all-knowing market machine sees...

Average Mortgage Rates Fell in 2016

If you got a mortgage last year and paid less than 2.76%, you beat the averages. That was the typical rate for a new mortgages in 2016, according to Mortgage Professionals Canada’s (MPC’s) annual mortgage survey. It was a good year for those renewing a mortgage. A majority (64%) switched into a lower rate, with the average being 2.70%. This data confirms the obvious, of...

TD Matches RBC’s Amortization Surcharge

It’s getting more expensive to lower your mortgage payments. TD became the second major bank today to announce higher rates on amortizations over 25 years. RBC started this trend a few weeks ago. “Effective Dec. 1, 2016, new fixed rate mortgages that have an amortization of greater than 25 years will have an additional 10 bps added to their overall rate,” said...

RBC’s New 2.94% Rate: No One’s Biting

Last week RBC threw a 2.94% 5-year fixed rate against the wall to see if it would stick. It hoped its bank peers would seize this opportunity for extra profit by raising their rates commensurately. But RBC’s trial balloon ain’t flyin. Not yet anyway. None of its peers have matched the extent of RBC’s rate hikes. Most have only raised 10-20...

RBC Now Upcharges on Longer Amortizations

What next? A major bank (RBC) is now charging extra for amortizations over 25 years. This morning RBC announced that, effective November 17, it’ll ding you an additional 10 basis points for 26- to 30-year amortizations. We don’t recall anything like this from a major bank before. “This is the first time we have introduced new pricing for clients who choose to amortize their...

This Is Not the Time to Gamble on Rates

“Lower for longer” has become the mantra in the rate market. But mantras don’t last forever. Trump is a rate market shock. He has single-handedly transformed how investors perceive North American growth prospects, inflation and default risk in the U.S. bond market. That’s driven Canada’s bellwether 5-year bond yield near one-year highs. Combine this with Ottawa’s regulatory changes, and suddenly today’s record-low...

Credit Scores Determine Your Mortgage Amount

By Chantal Chapman, Special to RateSpy If you’re a homebuyer with a down payment less than 20%, you’re now subject to Canada’s new mortgage rules. As a prospective purchaser, you probably want to know where you stand. Here’s a quick rundown… The biggest change you’ll face is the government’s new “stress test.” It forces insured borrowers to prove they can afford...