We have seen a rapid increase in bond yields which resulted in almost a 1% increase in fixed mortgage rates.  The speed and size of the change shocked a number of home buyers and the public in general.  What we have now are mortgage rates that are more determined by the free market and less so manipulated by the U.S. government.  The recent turmoil was set off by the small suggestion by the U.S. government that they see a time when they will be able to leave the bonds alone.  Bond traders were listening. Clearly the U.S. did manage to effectively lower bond yields for the last few years. I wonder how much overall effect the bond manipulation had on the U.S. recovery.

We are starting to see a time that the bank of Canada will need to increase the Prime rate.

Government of Canada bond yields are still trending high amidst investor panic in response to news of a quantitative easing decline in the U.S. Despite recent assurances that a U.S. interest rate hike will not happen suddenly, yields - and as a result fixed mortgage rates - are not looking to drop in July.

Slight economic improvement has prompted some experts to call for an increase to the Bank of Canada's Overnight Lending Rate, but lagging inflation suggests Canadian stimulus measures aren't going anywhere in the short term. It's not expected that Stephen Poloz will raise the rate in this month's announcement, and variable rates are likely to stay at current levels.

Fixed mortgage rates are continuing their upward trajectory this month. We've seen lenders hike their offerings in small increments, with many of the lowest offerings on the market now above the three per cent mark. Yields will continue to rise as long as investors react negatively to the possibility of the U.S. ending their government bond buying program. While the Fed has since released dovish language on their stimulus measures, indicating that a rate rise won't occur until employment benchmarks are met, the change in tone may not be enough to counter the impact on bonds.

While Poloz has indicated that a rate increase is unavoidable, inflation is still below the 2 per cent target, and growth has yet to be strong enough to warrant removing stimulus. This month's rate announcement is unlikely to introduce change, and variable mortgage rates will hold the status quo for the time being.

The recent high octane movements in the bond markets, which drive mortgage rates, are a direct outcome of Ben Bernanke's comments about the gradual curtailing of Quantitative Easing. Recent comments from Mr. Bernanke have tried to pull back from his earlier musings about less QE in 2014 but the damage has been done; the great bond bull market appears to be at an end and it's likely we will never see 2.79 per cent 5 – year rates in the near future or likely in our lifetimes again.

[The] Prime Rate in Canada (3.00 per cent) is clearly going to stay put till mid 2014 or even early 2015, so variable rate mortgages at Prime less 0.60 per cent or 2.40 per cent have suddenly become much more interesting and will likely become a market staple again as they were pre-2008.

While fixed rates edged up last month, a review of the housing stats from CREA reveal that while housing sales are up slightly, it appears to be a self-fulfilling prophecy as people are rushing to buy due to fear that mortgage rates will increase further.

Yet, as CREA noted, actual housing activity (not seasonally adjusted) is slightly below a year ago, in part because the changes by Finance Minister Flaherty effectively took some buyers out of the market as they no longer qualify under the more restrictive rules. Demand remains soft.

This summary review suggests no further changes in fixed rates.

Bank of Canada Governor Poloz is not going to end his honeymoon with an increase in the bank rate, as it is unwarranted. Moreover, we can be certain that the governor witnessed the swift and brutal attacks against Bernanke for even hinting at the end of QE, when the economy remained soft. Poloz will tread very carefully – and as an empirical economist who once was in charge of research at the bank – will be armed with a great deal of data e.g. employment, growth, inflation, confidence, before he announces an increase in the bank rate. That data and that economy do not yet exist.