With
bond yields
still climbing, the last nationally advertised sub-four-per-cent, five-year
fixed rates
waved goodbye this week.
Only a few regional providers remain in the high threes, including Butler Mortgage (Alberta, B.C., Ontario) and RateBuzz (Ontario), but they’re disappearing fast.
Meanwhile,
variable rates
are drawing more demand than five-year fixeds, and most of them still sit comfortably below four per cent.
The question is, how long will they stay there?
Markets are pricing in just one
Bank of Canada
hike this year, but some say it could take at least six months for the Strait of Hormuz to see sufficient tanker traffic again.
Given how closely bond yields are tracking oil prices lately, expensive crude and stubborn
inflation
remain serious rate risks.
Heaven help us if medium-term inflation outlooks start to de-anchor, something the Bank of Canada is closely watching for. On Monday it released its latest business outlook survey and respondents’
expectations had jump 60 basis points to 3.40 per cent. That qualifies as medium-term inflation, and it’s 140 basis points above target.
If markets are, in fact, underestimating inflation risk, most fixed-rate borrowers will be cheersing themselves for locking in.
Robert McLister
is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
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