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The story changes, though, if the escalation in bond yields is signalling a turn in momentum that could lead to multiple hikes over the next few months.
Except for a brief blip in June, when they hit 0.52 per cent for a day before crashing back down to 0.37 per cent, yields have hovered between 0.35 per cent to 0.40 per cent since April. In January, before COVID-19 hammered the bond market, yields sat at 1.3 per cent. The proceeding plunge led to a similar fall for five-year fixed mortgage rates. CanWise was offering a 2.49 per cent rate on a five-year fixed mortgage that is now 100 basis points lower.
Should Pfizer’s vaccine hit the market, Laird expects bond yields will rapidly recover, giving lenders the ability to hike mortgage rates alongside them. In a post-pandemic world, with inflation on the table, a much faster and more powerful escalation could occur.
And so while Canadians have long favoured variables rates, Eisner said they may want to consider locking in a five-year fixed rate now before the momentum turns against them.
“I personally have a rental property and obviously I check mortgage rates several times a day…. I locked in my rental property today,” Eisner said. “Now’s the time, if you’re on the fence.”
Financial Post
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