Real Estate

Canada 10 yr bond yield and fixed mortgage rates

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  • Mar 9th, 2020 2:41 pm
[OP]
Sr. Member
Dec 19, 2010
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Canada 10 yr bond yield and fixed mortgage rates

The 10 year bond yield seems to be at a 10+ year low. What does this mean for fixed rate mortgages? Curious about 5 yr fixed rate for uninsured mortgages, lowest a couple weeks back was 2.84%.

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Newbie
Jan 9, 2016
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Mississauga, ON
Today 5 Year Canadian Bond Yield is 0.74%. Discounted 5-year fixed rates are typically 150+ basis points above the 5-year yield. This “spread,” as it’s called, can vary anywhere from under 100 to over 200 in times of financial stress.

The 5-year fixed – 5-year yield spread if often narrowest in the busy spring market when mortgage competition is highest. It often inflates in the bank’s first quarter (November through January) when mortgage demand is the slowest.
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Apr 18, 2013
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Canada
mb7057 wrote: Today 5 Year Canadian Bond Yield is 0.74%. Discounted 5-year fixed rates are typically 150+ basis points above the 5-year yield. This “spread,” as it’s called, can vary anywhere from under 100 to over 200 in times of financial stress.

The 5-year fixed – 5-year yield spread if often narrowest in the busy spring market when mortgage competition is highest. It often inflates in the bank’s first quarter (November through January) when mortgage demand is the slowest.
So if I understand correctly, a new 5 year fixed mortgage should be around 2.25% based on current bond yields?
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Feb 2, 2014
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gbill2004 wrote: So if I understand correctly, a new 5 year fixed mortgage should be around 2.25% based on current bond yields?
Yes, mortgage rates have dropped as bond yields plummeted this week. Also BoC dropped their overnight rate by 50bps (which effects Prime / variable rates).

You can get as low as 2.14% 5-year fixed and 2.20% 5-year variable now.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
[OP]
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Dec 19, 2010
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CdnRealEstateGuy wrote: Yes, mortgage rates have dropped as bond yields plummeted this week. Also BoC dropped their overnight rate by 50bps (which effects Prime / variable rates).

You can get as low as 2.14% 5-year fixed and 2.20% 5-year variable now.
This is for high ratio correct? What about uninsured mortgages, what's the lowest 5 yr fixed rate and is the expectation these will stay the same/go lower?
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Feb 2, 2014
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Insured and non-insured.

Coronavirus is the cause for all of this, and that can change on a dime I think (I'm not up to date on that specific subject, but I hear their are cures?).
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
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Mar 22, 2010
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CdnRealEstateGuy wrote: Insured and non-insured.

Coronavirus is the cause for all of this, and that can change on a dime I think (I'm not up to date on that specific subject, but I hear their are cures?).
Probably not on public scale. If there were, market would have bounced back huge. It's still down quite a bit.
Member
Sep 27, 2004
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Ottawa
How long can this rate be held.

I have a mortgage to renew this Aug. Thinking to refinance.
CdnRealEstateGuy wrote: Yes, mortgage rates have dropped as bond yields plummeted this week. Also BoC dropped their overnight rate by 50bps (which effects Prime / variable rates).

You can get as low as 2.14% 5-year fixed and 2.20% 5-year variable now.
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JayJJJ wrote: How long can this rate be held.

I have a mortgage to renew this Aug. Thinking to refinance.
Max 120 days
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Jr. Member
Jun 15, 2015
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Thornhill, ON
JayJJJ wrote: How long can this rate be held.

I have a mortgage to renew this Aug. Thinking to refinance.
You are in luck. The US is in line for a .75% reduction on March 18. Canada should follow for a .25 - .5 % reduction.
Sr. Member
Nov 10, 2017
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DisneyKruze wrote: You are in luck. The US is in line for a .75% reduction on March 18. Canada should follow for a .25 - .5 % reduction.

75pts is pretty substantial. hope it won't create another "fear" effect
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Feb 9, 2009
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With oil crashing you can bet B of C will probably drop rates hard as well...
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Sanyo wrote: With oil crashing you can bet B of C will probably drop rates hard as well...
Yup. Welcome to the apocalypse, homies.
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[OP]
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The Canada 10 year bond yield is now 0.52%...fixed mortgage rates dropping further?

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