Tag Archive: bond yields


A Bridge to Lower Rates

Despite rates being less than a point from their all-time lows, borrowers are growing increasingly dissatisfied with shrinking mortgage discounts.

Coronavirus Mortgage Update – March 19

6:58 p.m. Update CMHC on Payment Deferrals: “CMHC has provided increased flexibility to defer mortgage payments on its insured homeowner mortgage loans, which means lenders are now able to defer payments on a borrower’s CMHC-insured mortgage up to six months without CMHC’s approval. Borrowers should speak to their lenders directly by going through their default management department to confirm if...

Fed Shocks Market With Sunday Emergency Rate Cut

The world’s most powerful central bank has slashed its main interest rate by one whole percentage point. This is the U.S. Federal Reserve’s largest emergency cut in its 100+ year history. The move is a desperate bid to keep money markets functioning and stimulate borrowing and economic activity. Malls, restaurants, bars, factories, sports seasons, schools, international borders and even Vegas casinos are...

Look Out Below. The Latest from the Rate Collapse

Five quick bulletins from the mortgage market: 1.  Canada’s 5-year swap, which guides fixed mortgage rates, is on track for one of its biggest down days in history. Driving this carnage is the biggest oil rout since the 1991 Gulf War. JP Morgan says, “The oil and gas sector represents about 6% of [Canada’s] GDP but we expect the hit...

Bond Yields Getting Nuked

If you ever wondered what bond yields would do if we were facing a potential nuclear holocaust, we’re getting a small taste of it today. We are seeing Canada’s 5-year yield, normally a key driver of fixed mortgage rates, crash for the second week in a row. This plunge in yields is eerily reminiscent of the vicious 2008 credit crisis,...

As Rates Collapse, the BoC Opines on Housing Risk

If you want to know what investors think of Canada’s economic prospects, this chart almost says it all: This sort of meltdown signals raw fear. Such moves are not usually reflective of just a little economic blip ahead, but a king-sized economic crisis. No hyperbole intended. What does it mean for rates? It means rate expectations are falling by the...

Bank of Canada Cuts But Will Prime Follow?

Amid a global growth scare, the BoC has slashed Canada’s most-watched rate for the first time in almost five years. “…The COVID-19 virus is a material negative shock to the Canadian and global outlooks,” the Bank said in its statement today. Despite how concerned the bank is about fuelling more debt, it chopped its overnight target by 50 bps to...

Amid Pandemic Potential: 5-Year Fixed or Variable?

Consider the state of our world: The yield curve is inverted (usually recessionary) Unemployment may be close to a cycle bottom (often recessionary) Oil prices are plunging (disinflationary) Consumers have too much debt and not enough savings (usually disinflationary) The market is desperate for yield (bullish for bonds / bearish for rates) Inflation is well-anchored (eliminating the need for rate hikes)...

Rates Fall Again & “No Float-Down”

One of the best short-term leading indicators of 5-year fixed mortgage rates is making a beeline towards a 2.5-year low. Canada’s 5-year swap rate is now just 1/10th of a percentage point away from this key threshold, which, if broken, will lead to further fixed-rate cuts. Banks routinely price fixed mortgages against swaps, which are interest rate derivatives used to...