5 Year Bonds Hit 2 Year High – Fixed Rates Rise Yet Again
Fixed rates rise yet again, as 5 year bonds hit 2 year highs on Thursday, Sept 5th at 2.16%. Most lenders are now in the 3.59% – 3.79% range for 5yr fixed terms, which is still within the normal bonds plus 1.6% – 1.8% spread we have seen. Many that are buying into bonds cite higher expected inflation, which would otherwise make bonds worth less.
If the current trends continue, where fixed rates continue to rise and variable rate discounting continues to get better, we will be cautiously advising more of our clients to consider a variable rate of Prime – .4% or better (2.6% or lower). All it takes, however, is bad economic data either in North America or even around the world to put downward pressure back onto bond yields. Although the last few months has seen only a slew of positive economic data, the last few years have been especially volatile and rates generally trend up and down like a roller coaster.
If you don’t have rates held for a pre-approval, or if your mortgage is coming up for renewal next year it would be wise to call us to discuss holding rates. If you have a renewal coming up soon and rates keep climbing, it may make sense to pay the penalty to get out of your mortgage early to take advantage of low fixed rates.
Kyle Green is our mortgage expert, you can reach him through his website www.kylegreen.ca