Since late last week, the Canada bond market has really jumped up and lenders have been hinting at mortgage interest rate increases, and early this week we saw them, with the most common 5-year fixed generally increasing to 2.79% from 2.59%, although there are still lower rate offered by lenders waiting to see if market is really going to move. As you can see in the graph, bond rates are trending up, and expect the bellweather 5-year fixed mortgage rates to be bond + 1.65%.
What's driving the market? A better-than-expected October U.S. jobs report (271,000 new jobs) gave the US Federal Reserve another sign of labor market improvement as it looks for an opportunity to begin raising interest rates. The Fed's policymaking committee has held interest rates near zero since December 2008 in a bid to increase lending and boost the economy
Money traders appear to be positioning for moves premised on a Fed which will tighten interest rates in the coming months. Analysts I follow think the bar has been met for a December hike and 100bps (1%) of total increases by September 2016 (3.79%?)
My take is that Canadian rates are rising in sympathy with the US. For ball-parking monthly payments, 2.79% equates to about $460/month per $100K borrowed amortized over 25 years. I have 120-day rate locks and pre-approvals available.
Questions? Please call.
Chris
