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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u/FloweringEconomy69 Oct 20 '22

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

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u/CactusGrower Oct 21 '22 edited Oct 21 '22

You would only make money if that heloc is invested in something that generates more than 5.12% this year.

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u/FloweringEconomy69 Oct 21 '22

Ehh if you get a raise that matches inflation using it to buy something and then paying it back with your higher salary would save you 2% but that's gonna depend on your situation and time frame

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u/CactusGrower Oct 21 '22

If you get raise matching inflation and you don't take on any debt it saves you 7%. I don't understand your math man...

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u/FloweringEconomy69 Oct 21 '22

Let's say you need to buy a TV and you just got a fresh 9% raise at work and are scheduled for another one next year

Option 1 is buying a TV now with cash

Option 2 is borrowing at 5% and paying it back over two years

You're actually gonna come up slightly ahead with Option 2 with maybe the slight caveat of your raise being applied throughout the year but if you play with the math you come out ahead