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What is happening to Mortgage Rates?

By Jim on Mar 07, 2016

Over the past couple of months we have seen some shifts in some of the most popular mortgage products in the market. We have seen a modest increase of about 0.20% to the most popular and heavily utilized 5yr fixed rate. While the 5yr rate has started to sneak up, especially with some of the major banks, there are still a few specials available on some of the shorter terms.

On to the popular variable rate products. We have seen the discounts off Prime Rate get almost eliminated completely since the fall of 2015. At one point the discounts being offered were nearly a full 1%, those discounts have been reduced to a measly 0.10% in some lender cases. There are still some good 3yr variable options that are close to a half percent that will also give you the option to revisit the discount sooner than the standard 5yrs. 

What has caused these small increases across the board? If one was basing the activity only on economic performance, specifically similar term length bonds, it would be difficult to justify the increases. However, over the last year banks and lenders have seen an increase in their cost of borrowing which means that these increases are not in line but actually a fixed bump in the normal differential between the bond yield and the resulting lending rates.

Please don't hesitate to contact me anytime if you have any questions!

Jim

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Canada Mortgage Direct Jim Henheffer

VERICO Canada Mortgage Direct Inc. Each Verico Broker is an independent owner operator.