Tag Archive: bond yields


Bank of Canada Rate Decision: Doves Fight the Hawk

The market knew we wouldn’t get a rate hike today. Instead, it was scouring the Bank of Canada’s messaging for guidance on where rates are headed. And the market found it. The bank’s statement this morning reinforced that it expects higher rates, but it will take longer than they thought. Here’s more on the BoC’s latest decision, and what it...

Mortgage Rates & Oligopoly Costs

Five-year Canadian yields are down 60 basis points in two months. Average 5-year fixed mortgage rates are down a measly 4 basis points.* Meanwhile south of the border, where they have this thing called mortgage competition, 5-year yields are down 54 bps and average 5-year fixed rates have fallen 16 bps so far. Average rates on the most popular U.S....

Oops – Bonds – Did – It – Again

Recessionary warnings from Apple and China, weak U.S. manufacturing data and a plunging stock market accelerated the market rate collapse today. Canada’s 5-year bond yield almost touched 1.75%, where it hasn’t been since 2017. The last time yields fell this fast was March 2015, while the Bank of Canada was in the midst of cutting rates. This is not your...

Yields Break 2018 Low

Market rates are diving again. This morning the 5-year bond yield reached its lowest point since 2017. Investors keep rushing into safe assets (i.e., buying bonds) as the stock and oil markets continue selling off. Oil prices have slid from $75+ in October to under $45 today. That virtually eliminates any chances of a Bank of Canada hike this month....

2018 – One Tough Mortgage Year

Few years have altered the mortgage landscape like 2018. Canada experienced what is arguably the biggest mortgage rule change of all time (OSFI’s B-20 and its “stress test”). It was a policy that hammered mortgage growth to almost three-decade lows, slashing buying power over 20% for uninsured mortgagors and forcing roughly 1 in 7 borrowers to change or abandon their mortgage...

5-year Yield Approaching January 2018 Lows

Canada’s 5-year bond yield sank to an 11-month low Wednesday as the Federal Reserve hiked U.S. rates again. But the Fed wasn’t as optimistic on the economy as some had hoped. In turn, it’s now projecting just two rate hikes in 2019, versus the prior estimate of three. On this side of the border, average core inflation dipped to 1.9%...

Bond Yield Massacre

The deluge in yields continues. Canada’s benchmark 5-year yield just hit its lowest point since June. The last time we saw this kind of carnage was January 2015. Back then, the Bank of Canada made emergency rate cuts to stave off the oil crisis. Implied odds are slim that the bank will reverse course and lower its key rate near-term. But...

Mortgage Rates. The Day of Reckoning

“You better be prepared to deal with rates 5% or higher. It’s a higher probability than most people think” —JP Morgan CEO, Jamie Dimon What if interest rates surged far higher and faster than you now envision? Picture this scenario for a moment: U.S. core price inflation above 3% for the first time since 1995 U.S. unemployment at 60-year lows...

Bond Yields Dive: Could Fixed Rates Follow?

All it takes to derail an uptrend in mortgage rates is one little global crisis. And that’s potentially what we’ve got. Canada’s 5-year bond yield—which drives fixed mortgage rates—has plunged. As of this writing, it’s down almost 30 basis points from its high two Fridays ago. This latest nosedive is courtesy of shoot-first-ask-questions-later AAA bond-buying. (Rates move inversely to bond...

The Mortgage Market Post B-20. Are the Wheels Coming Off?

Not exactly. One month after the mother of all mortgage rule changes, the wheels are still turning in Canada’s real estate and mortgage market. They’re just turning slower. But make no mistake, OSFI’s mortgage stress test has changed the landscape—for both borrowers and lenders. Here’s how: Fewer Mortgages Our best anecdotal guesstimate after speaking to a sampling of federally regulated...