Bond yields soar higher, fixed mortgage rates expected to follow

  6/14/2022 |   SHARE
Posted in Interest Rates by Vanguard Realty| Back to Main Blog Page

financial markets report

Bond yields surged to a fresh 14-year high this week, driving expectations that fixed rates are likely to continue rising.

As we reported last week, the Government of Canada 5-year bond yield was already on its way up, crossing the 3.20% threshold. Well, on Monday it broke the 3.51% barrier.

Rates

This is important because the 5-year bond yield is the best indicator for future moves in 5-year fixed mortgage rates.

Fixed mortgage rates have already been trending higher, with discounted, nationally available rates reaching an average of 4.80% for uninsured mortgages (those requiring a minimum down payment of 20%), while average insured rates have risen to an average of 4.57%, according to data tracked by Rob McLister, rate analyst and editor of MortgageLogic.news.

With bond yields up 20 basis points from Friday, borrowers should expect that 5-year fixed rates “will likely rise again this week,” noted Integrated Mortgage Planners broker Dave Larock, in his latest blog post. “This next round of increases will push five-year fixed rates offered by most lenders above 5% (about double where they were at the start of this year).”

Source: Canadian Mortgage Trends



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