Rising bond yields not affecting fixed rates for now

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Millicent Wong
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There's a good chance that Donald Trump's additional presidency will cost mortgage buyers dearly. He plans to stimulate the economy, which could further increase US debt and increase the global interest rate flood.

I'll delve deeper into my story tomorrow, but suffice it to say that yields have been rising in anticipation for weeks. And higher bond yields typically lead to higher fixed-rate mortgage rates. Fortunately for borrowers, however, upward pressure on mortgage rates is low for now – for two reasons:

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First, the Fed cut its key interest rate by 25 basis points on Thursday and indicated that it plans to cut further. As a result, bond traders' yields fell, easing pressure on fixed rates.

Second, lenders built up a nice margin cushion as yields fell from July to mid-September. When yields began to rise again, most people chose to eat up some of the difference rather than raise interest rates.

In fact, the lowest advertised nationwide uninsured fixed rate (4.64 percent for a three- or five-year contract) remains unchanged this week. It is just 10 basis points above its two-year low.

As far as variable interest rates go, they're on the way down faster than a wealthy retiree. Markets are betting on the Bank of Canada to cut interest rates by 25 to 50 basis points on December 11 and by 100 basis points over the next 12 months.

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That 100-basis-point forecast will change as markets digest how Trump's economic moves — particularly his obsession with spending and tariffs — could either boost or torpedo Canada's flagging economy.

Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.

Mortgage interest rates

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