Fixed mortgage rates continue to see price increases as bond yields remain high, with TD Canada Trust hiking their five-year fixed rates for the second time in as many weeks.
Effective today, TD’s five-year fixed closed is 3.39 per cent. This follows last Tuesday’s increase of 10 basis points to 3.29, along with a hike to their four-year fixed rate to 3.09 per cent. The rate raise came on the tail of lenders RBC and Laurentian, who also hiked select fixed rates last week.
Bond Yields Drop Slightly, But Still Prompt Increase
Government of Canada bond yields correspond directly with fixed mortgage rates. Lower yields signal a decline in investor interest, resulting in dropping bond prices. This leads to higher funding costs for lenders, who pass these costs along to consumers in the form of higher mortgage rates.
Today’s bond yields sit at 1.54 per cent, a slight drop from last week’s high of 1.63 per cent, and the 13-month high of 1.70 per cent, seen in early June. However, yields are still well above the 52-week low of 1.10, resulting in these higher rates levels, and an about face from previously competitive market conditions.
Specialty Lenders and Mortgage Brokers Follow Suit
While smaller lender and broker provided rates are traditionally lower than big bank offerings, their rates have also increased over the past week. The current best mortgage rate, according to our national comparison table, is 2.83 per cent, offered in British Columbia by True North Mortgage. This is 20 basis points higher than last week’s low of 2.68!
While the best rates on the market haven’t broached the three per cent threshold yet, we’re getting dangerously close – it’s 2.99 per cent for Nova Scotia, Newfoundland and Nova Scotia, and 2.88 in Ontario.
Should You Lock In Now Or Wait It Out?
These rates may seem steep compared to the record lows we’ve experienced this year (reaching 2.62 per cent in April!), keep in mind that these rates are still at historical lows – it was only five short years ago that the lowest five year fixed was 4.99 per cent.
If you’re on the market right now for a new home, or are looking to refinance or renew, today’s rates still offer significant savings – and we can only look to Canada’s economic performance and global recovery when forecasting which way bond yields will go next.