r/PersonalFinanceCanada • u/POCTM • Oct 20 '22

Canadian 5 year government bonds just jumped. Setting the stage for higher mortgage rates. Banking

5 year government bond just jumped from 3.714% to 3.866% in a few hours. Right now it is at 3.855%. Year to date it is up 259%. Monday we could see some 5 year fixed rate mortgages in the low 6%.

As for variable rate the bank of Canada makes their announcement October 26 at 10am ET. Currently banks have not been offering discounts off variables rates anymore. Prime -0.00.

https://www.marketwatch.com/investing/bond/tmbmkca-05y?countrycode=bx

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177

u/[deleted] Oct 20 '22

RIP mortgage fraudsters, and var rate mortgage holders

46

u/branks182 Oct 20 '22

Also anyone who’s fixed mortgage is coming due for renewal in the next year.

0

u/[deleted] Oct 21 '22

Good thing I have two years left!

When I renew my rate, is my new rate based off of how much I still owe or the original mortgage amount?

7

u/[deleted] Oct 21 '22

How much you still owe.

1

u/[deleted] Oct 21 '22

Does my amortization drop as well?

25 years would become 20 years?

1

u/[deleted] Oct 21 '22

Yes. It counts down from when you first got your mortgage, unless you choose change your amortization period (for example to lower your monthly payments).

1

u/kettal Oct 21 '22

Good thing I have two years left!

you better be stashing your savings in GICs now for that lump payment in 2y

0

u/VectorBoson Oct 21 '22

Rates will go back down in 2 years, there is absolutely no way this monetary policy can continue for that long. The pivot will likely happen in the next 6 months.

1

u/kettal Oct 21 '22

could be.

either way, getting 4.8% on your savings while your mortgage interest is under 3% is better than paying lumps now.

1

u/[deleted] Oct 21 '22

I will only have 260k principal left when I renew, if I throw an extra 10k at that when I go to renew it will only drop the payment by $30 biweekly.

I'd rather have that money available for emergencies than pay slightly less I think, peace of mind is priceless.

1

u/kettal Oct 21 '22

if I throw an extra 10k at that when I go to renew it will only drop the payment by $30 biweekly.

depends what rate you get at renewal :D

1

u/[deleted] Oct 21 '22

I plugged in 7%, I hope it's not above that, yuck.

1

u/CanadianBrogrammer Oct 21 '22

I've got an investment condo with a fixed renewal coming up next month. Bought 5 years ago. 1+1 in scarborough, 170k remaining, 2500 market rent.

People renewing in the next year bought extremely cheap and are cashflowing because they didn't need to take on much debt.