As Government bond yields rise, some banks are again raising Canada Mortgage Rates. Indications are that this action relates to concerns regarding inflation and increasing confidence in a global economic recovery.
From Tuesday, the Toronto-Dominion Bank and the Canadian Imperial Bank of Commerce raised their mortgage rates by 0.35 of a percentage point. This followed a statement, indicating that the greatest increases would be for loans with period terms of five to ten years.
The Royal Bank of Canada also increased its Canada Mortgage Rates by 0.35 of a percentage point, on loans over five and ten year terms. The rate for its seven-year mortgage term rose by 0.15 of a percentage point.
Five year Canadian Government bond yields, have risen sharply recently, leaping 24 basis points during last week. It is usual practice for Canada Mortgage Rates to follow these bonds closely. One of the most popular loan types with Canadian homeowners is the five year closed mortgage. This will not escape the new Canada Mortgage Rates and will rise to 5.69%.
Increased rates will apply to loans with terms of one, three and four years, rising by 0.2 of a percentage point. However, a two-year loan term will increase by 0.3 of a percentage point.
Reported possible causes for the increase in Canada Mortgage Rates, include the following observation. When traders move their investment activity from the considered safety of bonds, to equities carrying a greater risk factor, then fixed mortgage rates, which are highly influenced by the bond market.
Very informative.
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