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Rate Watch

The posted 5-year rate reduction two weeks ago had all the trappings of a head fake. With bond yields* making 40-day highs, RBC deemed it appropriate to lower its 5-year fixed rates by .10%. Other banks followed suit as usual, and posted dropped to 5.19%. That’s Canada’s lowest posted long-term mortgage rate since the 1950s.
5-year yields closed up huge last Monday and discounted fixed rates followed. Most lenders have already announced fixed-rate increases. Regardless of your position on the fixed vs. variable debate, it can’t be overstressed how low fixed rates are right now. 5-year fixed mortgages are a whopping 1.66% below the 10-year average of the deep-discounted rates. Locking in at these all time low rates is like winning a small lottery, historically speaking.
So if you need a fixed rate for a new mortgage closing in the next 180 days, be prepared to act—especially if yields continue higher.
* 5-year bond yields typically lead 5-year fixed mortgage rates.
Disclaimer: As always, only higher powers from above can predict interest rates. It’s always possible that yields could tumble back down. On the other hand, mortgages are a probability game and most would argue that rate risk is biased over 50% to the upside.

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