Tag Archive: bond yields


Wednesday’s Historic Events Nudge Rates Higher

The Mortgage Report: Jan. 6, 2021 U.S. 5-year yields leaped to a 7-week high on Wednesday as Democrats took control of all three houses of government, thanks to their historic win in Georgia. Canada’s 5-year yield rose in sympathy by a less notable 2 bps, but economists nonetheless expect more of an incline in rates this year. The reason: Democrats...

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You Can Still Count on Rock-Bottom Rates, Says BoC

—The Mortgage Report: Nov. 27— If you’re out there mortgage shopping, BoC chief Tiff Macklem had a message for you Thursday: “We want to be very clear, Canadians can be confident that borrowing costs are going to remain very low for a long time.” It’s a mantra he’s repeated for months. Among the reasons: “…The economy still has more than...

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More Zigs & Zags to Come

—The Mortgage Report: Weekend Edition— Canada’s rate outlook got a boost this week from two influential developments: Promising vaccine news (20 potential vaccines are in late-stage trials, including Pfizer’s drug that’s reportedly over 90% effective), and The widespread acceptance of Joe Biden’s presidential victory. This much-needed dose of good news led investors to sell government bonds, which is typical when...

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Rate Risk Just Went Up

Bond yields shot up like a cannonball after news broke this morning of Pfizer’s positive vaccine trials. Canada’s 5-year swap rate, one of the best leading indicators of fixed mortgage rates, sailed to a 5-month high. Now, everyone’s trying to figure out how long it’ll take before this translates into above-target inflation, which would be the Bank of Canada’s trigger...

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Too Close to Call

The Latest on Canadian Mortgage Rates: Election 2020 —10:33 p.m. Update— Biden is just 6 electoral votes from victory, reports AP. It’s never over till it’s over, but thus far election 2020 doesn’t look like a threat to mortgage rates. Yields have trended lower, suggesting that borrowing costs in Canada won’t be adversely impacted like they were after Trump’s 2016...

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Record-Low Fixed Rates May Depend on the BoC

—The Mortgage Report: Oct. 21— Canada’s budget deficit will end 2020 “near 20% of GDP,” according to the IMF. “That represents the fourth-highest projected deficit in the world, after Libya, Aruba and the Maldives,” says Bloomberg News. With that degree of fiscal hemorrhaging in Ottawa, bond yields (and hence fixed mortgage rates) would jump sooner were it not for Bank...

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“This Time is for Real,” Says BofA

—The Mortgage Report: Oct. 13— If you like definitive-sounding rate calls, here’s one: “The 2020 recession AND the 40-year bond rally are over,” declares Bank of America. Positive economic data surprises, declining uncertainty post-U.S. election and “massive monetary and fiscal policy support” will “set the stage” for higher bond yields, the bank stated in a report on Tuesday. If true,...

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Refi Ahead of Condo Trouble?

—The Mortgage Report: Oct. 7— Toronto condo listings have exploded 215% to a record high, reports Bloomberg. And they’re projected to be even higher in October, according to HouseSigma. Driving that surprising number: skittish investors (many with negative cash flow given surging rental listings and a 14% y/y drop in rents) “elevator phobia” people coming off mortgage deferrals relatively higher...

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The Bank of Canada Controls Your Mortgage Rate

Bond yields heavily influence what people pay for a mortgage. In general, the more government bond-buying there is, the lower fixed mortgage rates go. Explainer: Bond prices and bond rates (yields) always move inversely. Fixed mortgage rates are benchmarked against bond yields. Governments around the world are manipulating mortgage rates by buying their nations’ own debt. Take the U.S. Federal...

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The Striking Rate/Stock Divergence Continues

—The Mortgage Report: Sept. 2— Here’s something that baffles even experienced financial professionals. The U.S. stock market is exploding to all-time highs while bond yields trudge near record lows. It’s a question investors are asking all the time: are stocks signalling a growth recovery that will lift yields higher? The mortgage relevance is clear: if U.S. yields pop, so do...

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