Fixed mortgage rates are priced off of government of Canada benchmark bond yields. 5 year fixed mortgages are currently the most popular mortgage term for Canadian homeowners, and 5 year government of Canada bond yields continue to hover around all-time lows. Over the past four months the yield has trended downward to it’s current rate of 1.28% which is also below it’s 12 month average of 1.38%.
5 year fixed mortgage rates have been hovering in the 3.25% to 3.0% range over the same time period while current 5 year fixed mortgage rates remain near the 3.0% mark.
Canada’s economy continues to outperform the rest of the world with a steady as she goes demeanor while events like the US fiscal cliff and European debt crisis abound internationally. This strong domestic economy is the reason for the low Canadian benchmark bond yields. Low risk equals low return.
We can expect that our 5 year fixed mortgage rates will remain at historical lows. While unexpected statistics and corporate maneuverings could move rates up or down by 0.25% without warning, these minor swings mean little to homeowners and their long term affordability.