If you want to know what’s moving Canadian mortgage rates, watch the American news.
The reason? Canadian bonds are 95% correlated with American bonds (Treasuries) and bond yields are 97% correlated with 5-year fixed mortgage rates. (See: Yields and Fixed Mortgage Rates)
In other words, Canadian rates are married to U.S. rates. So it’s no wonder that our mortgage rates are being shifted by things like the U.S. debt ceiling and fiscal cliff.
Below is a list of factors weighing on mortgage rates right now:
Rates are in a tug of war between bullish factors (those lifting yields) and bearish factors (those depressing yields). Here’s a current summary of each:
Bullish factors for rates
- Cliff relief: The U.S. dodged a full-scale swan dive off the “fiscal cliff.” As a result, relieved traders have been selling “safe” bonds and rotating into riskier assets. There may be more of that to come, especially if debt ceiling talks progress better than expected.
Spring Market: Bond and real estate seasonality are sometimes underestimated. As the prime homebuying season approaches, fixed-rate mortgage demand could help support yields.
Bearish factors for rates
- A U.S. Econoflop: Congress’s new tax increases are growth and job killers. And, the wasted opportunity to cut spending means future U.S. “austerity” measures could be more severe.
- Debt Ceiling: In a few months, Congress will face its next big decision: raise the debt ceiling for the 41st time in 30 years, or let the U.S. default. The latter isn’t likely but the thought of it could perpetuate the safe-haven trade (i.e. keep people from dumping bonds and driving up yields).
- Euro-risk: Europe’s three years of debt turmoil has been upstaged, but not eliminated. European central bank liquidity is a Band-Aid solution and Spain and Greece are in depression.
Wildcards for rates
- Rating agencies: The New Year’s fiscal cliff compromise cut just $12 billion in U.S. spending, while adding $4 trillion of new debt. Credit rating agencies must be shaking their heads. Without budgetary tightening by spring, another downgrade is not unthinkable. Losing another AAA rating would either seriously damage the Treasury’s “risk free” reputation and spike yields, or compel investors to buy U.S. Treasuries in knee-jerk fashion (like in August 2011).
U.S. and/or Canadian Outperformance: Most traders expect low rates to stick around. But if employment improves significantly and traders sense that the Fed is abandoning its commitment to hold down rates, all bets are off. The historic Treasuries rally will unwind and yields will lift-off.
At the moment, there is maximum uncertainty. While nobody expects major rate increases near-term, a 20-30 basis point increase would shock no one.
So if you need a mortgage in the next six months, don’t hesitate to lock in at today’s epic low rates.
Rob McLister, CMT




Comments
http://uk.genuineuggbootsukshop.co.uk UGG snow boots are constantly adding elements of fashion,so that my journey is visibly hot ironshttp://uk.genuineuggbootsukshop.co.uk/ugg-classic-short-mens-c-17.html?zenid=8c3f109371421d4598c0f80205277a6atrend.UGG,presents a different series of spring,using a variety of style and bold design, so once again become fashionable UGG label chines.UGG snow boots are constantly adding elements of fashion,so that my
http://uk.genuineuggbootsukshop.co.uk/ugg-scarf-c-5.htmljourney is visibly hot irons trend.
Coach Factory Outlet
State health standards, a more than healthy standard, than of GDP. PlayCoach Outlet Online
an example, a young man and an elderly man, the United States isCoach Outlet Store Online
the elderly, money and status, China is a young man,Coach Outlet Online
currently is not money, but relatively healthy status. This isCoach Online Outlet
only an analogy, some indicators in our study the performance of China,Coach Outlet Online
not to say that in some indicators ranked by the Chinese is good.Lauren Conrad became well known after starring in reality tv louis vuitton purses shows Laguna Beach and The Hills. Born and raised in California, Lauren is the ultimate all American girl that so many of uscoach outlet online want to be. She launched her first clothing line in 2007, The Lauren Conrad Collection which was followed by LC Lauren Conrad in 2009, sold exclusively at Kohls.This year, Conrad launched her third clothing line Paper Crown, super cute and stylish, I think it is her best stab yet. It is tailored for the contemporary market and consists of feminine dresses both short and long, menswear inspired basics, as well as tops and bottoms. The debut collection consists of key pieces made in silk charmeuse, chiffon and stretch wovens.
Conrad has cheap coach bags a lovely website whichcoach outlet store online covers all of her ventures, from fashion to beauty to book writing. but to shopcoach outlet Paper Crown you need to head to . Paper Crown ‘is a collection for those who like tocheap coach handbags play dresscoach outlet up louis vuitton outlet online in a real world’. The debut collection has just launched for A/W and is inspired bycoach purse outlet Conrad’s love of fanciful design elements that transcend thecoach factory outlet boundaries of everyday fashion.
electronics homework provider ║ law essay provider ║finance homework provider ║Help with home work