There is increased pressure on fixed mortgage rates as bond yields continue to rise. Since the US Federal Reserve announced in December 2021 that they expect to raise rates by as much as 3x in 2022. Some economists are now casting their predictions of increase at around 4x.

Bond yields have been pushed higher, however; no upward fixed rate movement has ensued currently. The US Federal Reserve hinted in early January that they may need to raise rates much earlier than expected. This caused an immediate fire within the bond yields which went up 13% on January 4th which was the first business year of 2022 and has risen a total of 35% since the information was released. 

The resiliency of fixed mortgage rates has been shocking considering the sharp increase in yields, mortgage lenders will only be able to hold on for so long until they are forced to increase rates. They are currently past the breaking point; this has caused some lenders to increase rates by 0.10% - 0.15%. Other lenders will follow suit throughout the week if the bond yields continue to climb.

Bond Yields Are At Their Highest Levels Since 2019

Since November 2019 bond yields have currently reached their highest level. At that point in time the lowest 5-year fixed rate sat around 3.59% - 3.84%. Do we expect fixed mortgage rates to climb back to these projected levels? Yes, they will. We can’t predict exactly when they will increase but they are expected to climb back up into that range. 

What Can We Expect From The Bank Of Canada In The Near Future?

The next scheduled announcement by the BOC is next Wednesday January 26th. The BOC’s rate announcement on December 8th projected that they don’t plan to increase their rate until the middle 2 quarters of 2022. This is a sheer projection. The BOC will likely remain quiet until the 26th of January and some foresee them increasing their rate by 0.25% during this release. The BOC generally follows the US and since they hinted at increasing their rate sooner than expected it would be a safe prediction that the BOC will do the same. 

Despite speculation, it would be shocking if the BOC introduces an increase given the uncertainty around the current state of the pandemic. The US is currently widely open where most of Canadian provinces have multiple restrictions still in effect. This puts Canada behind the US. There are many speculations happening right now but it is hard to tell what is in store for the economy world wide. If you have any further questions regarding your mortgage give us a call and we can go over it with detail.