Posted on
May 15, 2015
by
Denis Hrstic
How the bond market meltdown could push fixed mortgage rates higher
THE CANADIAN PRESS/Sean Kilpatrick
Rate hikes would occur as sales have dropped in Calgary and Edmonton. Prices have peaked in every market in the country with the exception of Vancouver and Toronto.
An increase in mortgage rates is likely just around the corner, a situation that might push some consumers to lock down their rates.
Given that five-year Government of Canada bond yields have climbed about 40 basis points in the last month, and mortgage rates track bonds, it makes sense to try to get a rate guarantee if you are shopping for a house, Rob McLister of ratespy.comsays.
“There is an inclination to recapture some of the spread [between bond yields and mortgage rates],” says McLister, who expects up to a 15-basis point increase on the five-year.
Consumers might consider getting pre-approved for a mortgage before they buy a home – an option that offers a guaranteed rate for as much as 180 days.
“I got an email from one lender suggesting we may see something in the coming days,” said Vince Gaetano, a principle at monstermortgage.ca. “I think it would be very prudent [to get pre-approved]. The only reason people don’t is they are just lazy or don’t know when their mortgage is up for renewal.”
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