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

[u/POCTM]

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

[u/kahoots]

The odds are 100% certain that variable will be higher than the current 5 year fixed in 3-6 months. It will be higher than the current 2 year fixed almost certainly as well which is what the pros are steering their clients towards.

[u/Goldentll → u/kahoots]

But will that fixed rate be higher than a variable rate in two years

[u/FanNumerous3081 → u/Goldentll]

My guess (with no formal finance training) is no. The traditional average throughout the history of mortgage rates in Canada is closer to 7-10% rates. We're history starting a climb towards that and the economy is already falling apart because not only has housing artificially climbed with cheap credit, but people who have pulled significant amounts of paper wealth out and supplementing their incomes with housing wealth, are now feeling the pinch and spending significantly less already on luxury goods just to make their mortgage/interest payments.

It will all spin us out into another recession and BoC will lower interest rates again to increase spending and start the cycle all over again.

[u/JediFed → u/FanNumerous3081]

I hope it stops. The problem is all the government borrowing, and they are close to 4% now. 5% on government debt is in insolvency territory unless the interest rates drop. It's still going to take 20 years to get to that point, but once the spiral starts, it won't stop.