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The sweet spot of mortgage rates this week
Robert McLister: For anyone looking to lock-in, this fixed rate strikes a balance between ulcer-avoidance and not overpaying on interest
Robert McLister · Yahoo! Finance Canada
A few days ago, Canada's five-year bond yield — the pace car for fixed mortgage rates — was cruising at 3.33 per cent. Today, it's at 3.60 per cent. That is a breathtaking jump in less than a week, and not the good kind of breathtaking.
Last week's brief rate plunge had a few lenders optimistically trimming their fixed rates. Today, those same lenders may have to slam the transmission into reverse.
Most will likely hold off on hikes until Monday's inflation print lands, but the trajectory of this trend is ugly regardless.
If you want off the rollercoaster right now, an uninsured three-year fixed in the mid-fours is the sweet spot. It strikes a solid balance between avoiding rate-induced ulcers and not overpaying on interest — at least according to bond market forward rates, which are far from a crystal ball, but still the least terrible psychic we've got.
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On the flip side, if you're a well-qualified borrower whose bingo card features an Iranian peace deal, tanking oil prices, and cooling tariff inflation, a fixed-payment variable rate isn't crazy.
That's doubly true if you need a default-insured mortgage, where deep-discount lenders like Nesto are dangling rates more than one per cent below prime, and regional players like Ratebuzz are shaving off up to 1.16 per cent.
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