Will Mortgage Rates Drop with Record Low Bond Yield

Will Mortgage Rates Drop with Record Low Bond Yield

Quick question for you.

What’s falling as fast as oil prices but not getting anywhere near the attention?

The answer – with a hint in the headline – is the yield on five-year Canadian Government bonds. The bond yield fell to a record low of just a hair over 1 per cent this week.

That will hopefully spur lenders to drop their mortgage rates to record lows as well. We’ve seen a little downward movement but nowhere near a proportional drop.

Most lenders are at 2.89 per cent for five-year fixed rate mortgages this week. Slightly better offers can be had with quick-close specials.

A quick close special typically offers a slightly reduced rate if a mortgage can fund within 30 or 45 days (depending on the lender) of the application date.

Lenders will try to drag their heels on dropping rates in a bid to maximize revenues and profits.

But at some point a lender may break ranks in a bid to grab headline attention and market share.

If you are in the market to buy a home, now would be a great time to get a pre-approval and get a 120 day interest rate hold while you are shopping for your home.

People with significant equity in their homes and who are paying higher interest rates may consider refinancing to a lower rate. You’ll likely pay a penalty but the savings may more than make up for that.

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