Mortgage Rates - Why aren't they better?

There was a time not that long ago when fixed mortgage rates would be priced about 1.20% higher than a Government of Canada Bond with the same term. For example, when the 5 year bond was at 2.5% you would be able to get a 5 year fixed-rate mortgage at 3.7%. Enter the Mortgage Meltdown: When the “mortgage crisis” hit in the USA the spread between the bond and the mortgage rates increased quite a bit. The consensus was that it would probably return to its traditional spread of about 1.50%.

It seems like people have forgotten about this spread with the current low level of fixed mortgage rates. Most people would think that a 3.5% 5-year mortgage rate is a great deal, and it is. I just think more people would be frustrated with their banks if they knew that the 5-year bond yield is currently sitting at 1.4%. This means they are charging more than 2% above the bond.

While bankers will tell you a sad story about how they are losing money on their Variable Rate Mortgages (more on that in a future Rate Watch) I think they are profit grabbing. The average consumer is not informed like we are so; if you want to make sure you (or any of your friends and family) are paying the least amount of money to the banks please give us a call. We’d be happy to help!

Warm regards,
Chris
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Christopher Bisson
The Mortgage Centre
Toll Free 1-866-838-4366 x1003

www.mortgageconcierge.ca