5 year Government of Canada benchmark bond yields were 1.30% just a year ago today and after a year of relatively minor changes are just now spiking at 1.81%. This 0.51% increase is putting upward pressure on 5 year mortgage rates suggesting the new 5 year mortgage rate should be 3.39% up from 2.89% just a few weeks ago.
Although nobody wants to pay an extra .50% on their mortgage rate if they don’t have to, there’s no cause for alarm. Looking at a slightly longer time horizon of the last 3 years we see that the current 1.81% yield is right in line with the average of 1.76%, and well below the 3 year high of 2.89%. The past 3 years have been a period of extremely low mortgage rates and that holds true today.
2 years ago, the difference was that, more consumers were picking variable mortgage rates over fixed mortgage rates. When there’s a large gap between the two mortgage rates then more borrowers will accept the risk associated with variable mortgage rates.
When considering your next mortgage be sure to seek the advice of an Accredited Mortgage Professional (AMP) who will take your personal circumstances into account when recommending your best mortgage option.