Current Mortgage Rate Environment
Tom Van Horne • August 16, 2024
Fixed Rates are seeing a slight pause in reductions and in some cases rise to rates due to Canadian bond yields starting to climb once more, after seeing them drop to their lowest point of the year last month.
Government of Canada bond yields, which influence fixed mortgage rates, have surged over 30 basis points (0.30%).
As of Tuesday, the 5-year GoC bond yield hit a two-week high, breaking above 3.60%, while the U.S. 10-year Treasury yield also reached its highest point since mid-June. Several factors contribute to this turnaround:
- Political uncertainty in the USA, elections and the poor performance of Biden in that latest debate.
- US federal reserve uncertainty to commit to rate drops. This inflationary trend is likely to delay rate relief for variable-rate mortgage borrowers. While a rate cut from the Bank of Canada was previously expected in July, forecasts now suggest a cut is more likely in September.
In summary, rising bond yields indicate that the recent trend of declining mortgage rates may
pause or reverse, depending on future inflation rates and economic conditions.
Securing rate holds and pre-approvals, which lock in rates for 90-120 days, is crucial during this period of volatility. For pre-construction, rate holds are available for 6 to 12 months, providing added stability.
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Original Article by Guiding Star Mortgage Available Here
