Bond Yield for Thursday July 9th, 2009

Canadian 5 yr bond yields -.04bps to 2.37- Four weeks ago it was 2.82. The spread, based on 5 yr rate of 4.49%,  is at 2.12%.

Pressure on fixed 5 year: Down.
Financial Post - Markets

Lenders typically like to keep a spread of 1.70% to 1.80% between their fixed five year rates and the current 5 year bond yield. If the bond yield increases then the spread will shrink putting upward pressure on mortgage interest rates. The reverse is also true. If bond yields decrease then the spread widens and there is downwards pressure on fixed rate mortgages.

A such there is pressure for fixed 5 year rates to be around 2.37 + 1.80= 4.17%

Canadian 5 yr bond yields -.04bps to 2.37- Four weeks ago it was 2.82. The spread, based on 5 yr rate of 4.49%,  is at 2.12%.

Pressure on fixed 5 year: Down.
Financial Post - Markets

Lenders typically like to keep a spread of 1.70% to 1.80% between their fixed five year rates and the current 5 year bond yield. If the bond yield increases then the spread will shrink putting upward pressure on mortgage interest rates. The reverse is also true. If bond yields decrease then the spread widens and there is downwards pressure on fixed rate mortgages.

A such there is pressure for fixed 5 year rates to be around 2.37 + 1.80= 4.17%