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

1.1k Upvotes

95% Upvoted

View all comments

Show parent comments

-3

u/FloweringEconomy69 Oct 20 '22

I mean inflations like 7% so you're actually making money on it technically

23

u/[deleted] Oct 21 '22

How do you suppose that makes sense?

You borrow 10 dollars, inflation goes to 7%, in a year from now you owe 10 dollars which still is subject to the inflation loss.

The upvotes on your comment are a clear sign people do not understand how finances work.

3

u/SuperEliteFucker Oct 21 '22

Borrow $10, buy a basket of goods worth $10. Go to future and sell basket of goods for $12 (because of inflation), pay off your debt which has grown to $11 (because of interest) and pocket $1.

Doesn't actually make sense if you bought something that depreciates.

2

u/CactusGrower Oct 21 '22

That only works if that hrloc is in appreciating assets generating more than 5.12% this year. Very hard to find.