Although there are a lot of indicators of where interest rates may be heading. A good indicator to look at for rising fixed interest rates are Canadian bond yields. How larger institutions source their money, is purchasing money at roughly a bond yield cost, and then reselling that money to us at 1.20% to 1.40% more of that cost. So if a bond yield is at 0.40%, it's possible to be getting 1.60% to 1.80% on a rate. It's not a perfect model, and it doesn't follow this trend daily, or perfectly. Watching bond yields can help see if "the market" is moving in a climbing rate environment, remaining steady, or is trending downward with rates. It is an indicator of what is happening.
Here is the link to the Canadian 5 year bond prices which normally dictates the 5 year pricing:
https://ca.investing.com/rates-bonds/canada-5-year-bond-yield
Here is the link to the Canadian 10 year bond prices which normally dictates the 10 year pricing:
https://ca.investing.com/rates-bonds/canada-10-year-bond-yield
How to Use the Charts:
Both of the charts default to the last 3 days of activity of bond yield pricing. If you click the BLUE LINKS above the chart, it will move the time scale. Look for 1 5 15 30 1H 5H 1D 1W 1M in blue. These time options allow you to zoom out or zoom into time frames between DAILY bond movement to DECADE bond movement.
Click the default from "15" to "5H", you can see the activity for the last 2 months roughly. Then if you click the link on the chart from "15" to "1M" you can see the activity since January 2012 till today. You can scroll your mouse (or finger) over the chart to see where that price has been over the last 10 years, and have a good idea of what rates have done since 2012.
Interpretation:
Clearly you can see that since January of 2015 till October of 2016, were were in a good low period where a lot of clients secured 2.49% on a 5 year fixed rate. In March of 2020, you can see that rates dropped down quite significantly to an all time low. And in February 2021, the 10 year bond yield started to recover and rose from roughly 0.80% in January 2021 to 1.40% in March 2021. This 0.60% rise can show an indication that longer term fixed rates could return back to Pre-Pandemic pricing we saw in February of 2020. Although this rise looks significant, it follows the pricing we saw in 2015 and 2016 when we all believed rates were fantastic.
Recommendation:
If your mortgage is coming up for renewal within the next 12 months, securing a rate hold leading into your renewal now is a good idea to capture a less than 2.00% interest rates with your renewal. Remember, we all thought that 2.49% was a great 5 year fixed rate 5 years ago. Obtaining that rate or better is still a really low cost effective way to pay less interest over the life of your mortgage. Email office@castlemtg.ca and in the subject line leave "RATE HOLD" as your subject if you want our office to secure a rate hold at no charge to you.