New Mortgage Information

Mortgage rates are going up from their all time lows right now. The Bank of Canada is also talking about increasing minimum down payments 5% to 10% and lowering amortizations from 35 years to 30 years. Interest Rates Rising From 71 Year, All-Time Low! A pre-approval with hold all-time low rates for up to 120 days The Short Version The cost of money that banks get from the mortgage bond market to fund their mortgages is getting more expensive and will cause interest rates to go up. The Detailed Version Canadian 5 yr bond yields +.04 bps to 2.74. The spread (based on the 5 yr rate published rate of 3.99%) is now well below the comfort zone to 1.25%. Ideally lenders are looking for a spread between 1.35 and 1.55. This means that rates HAVE TO GO UP! The data behind this increase is that the bond market is starting to smell the coming inflation. The US has printed money and increased their money supply by 50%, has $1.8 Trillion in debt. Canada is better off with only $55 Billion in debt but both the US and Canada’s actions are inflationary and this causes rates to go up. rates may not be back at these rates for the rest of our lifetimes. The long term average is about 6.5% for a 5 year. Today rates are 3.89%! Mortgage Information Courtesy of Mark Herman of Mortgage Alliance.