You can expect 5 year fixed mortgage rates to move up slightly over the next 30 days. Fixed mortgage rates are tied to the bond market as most mortgage lenders issue bonds to raise the money to lend out as residential mortgages. The lower the yields on the bonds they have to pay out, the lower the fixed mortgage rates they can offer. The bond market has been on a mini roller coaster for the first 5 months of this year, challenging mortgage lenders to maintain competitive mortgage rates.
The 5 year fixed government of Canada benchmark bond yield is currently sitting at 1.48%, marginally higher than the 1.43% it started off the year on January 2, 2013. During these 5 months it’s swung as high as 1.53% and as low as 1.15%. All the while 5 year fixed mortgage rates have remained relatively flat. The banks have built in some breathing room to absorb the ups and downs of the bond market, but they are getting close to the tipping point where a 0.10% to .25% increase is likely.
Global economic conditions have not materially changed and neither has the outlook for 5 year fixed mortgage rates. Some minor variances are to be expected, but it’s expected that mortgage rates will remain near their current levels for the next 12 months.