5-Year Bond Yields Fall, Lower Rates Incoming?

It was interesting to watch the markets react earlier today as Mr. Poloz and Mr. Bernanke each gave their speech.

At one point today, Canada’s 5-year government bond fell -8.3% from a high of 2.16 to 1.98.

5-year bond
What’s so important about the 5-year government bond?  Bond yields usually precede changes in fixed mortgage rates.  A look at the chart below shows the bond yield rise and explains why mortgage fixed rates have been increasing over the past several months as well.

5-year bond - 6 months

Of course today’s -8.3% intraday drop doesn’t suggest we’ll immediately be seeing any changes to  fixed-rate mortgages, but it’s something to keep an eye on.

If you want to follow bond yields, here are some good sites:

3 responses to “5-Year Bond Yields Fall, Lower Rates Incoming?

  1. Bank of Canada Governor Stephen Poloz said Wednesday he doesn’t see a bubble in the Canadian housing market despite some strong recent data that defied expectations of a sustained slowdown after the government tightened mortgage rules last year.

    “I don’t foresee that there is a bubble in Canada’s housing market,” Mr. Poloz said in a press conference

    (Read entire article here)

  2. Here`s an older chart from TD in 2012 showing the correlation between bond yields and fixed mortgage rates:

  3. Pingback: Mortgage Rates Edge Lower – Find the Best Rate | Calgary Real Estate Review

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