BLOGGED: Spotlight on Mortgages: June 7, 2013 http://t.co/hIadWelxbY + MORE Jun 7th

We could be in for a slow summer in the mortgage market, thanks to housing moderation and mortgage rule tightening over the last 12 months. This may have contributed to…

One of Canada’s biggest mortgage lenders says many of its rates are going up Monday.

Among all the ups and downs in Canada's housing market over the last few months, one thing has remained certain: Mortgage rates are low. This has spurred homebuyers and homeowners alike to obtain new mortgages or refinance their current ones, offsetting the cooldown in sales due to Finance Minister Jim Flaherty's restrictions on government-backed mortgages.
However, some industry observers are exploring the possibility that rates may be rising sooner rather than later.
"If you're house hunting or thinking of refinancing, and you don't have a mortgage rate hold, consider getting one," writes Rob McLister for Canadian Mortgage Trends. "Canada's 5-year bond yield just pierced a three-month high. That means – barring a big reversal - there's a good likelihood that fixed rates will ratchet higher. (Bond yields steer fixed mortgage pricing, most of the time.)"

McLister goes on to point out that some lenders have already announced higher rates, increasing five to 10 basis points on longer fixed-rate home loans…

The bond markets have been particularly volatile for the past few weeks on fears that the credit situations in places such as Cyprus could spiral out of control and bring the global markets down with it. The loss of confidence in some of these European Union nations is spiking up yields on bonds in countries with strong ties to the continent. Canada is no exception we have recently seen a spike in rates up to 1.10 as of June 6. Not a huge number, but it does indicate that fixed mortgage rates are poised to rise. Here’s how it works
Bonds and Fixed Mortgage Rates
When a bank offers you an interest rate on a loan (mortgage) they are being guided by the rate they are getting themselves. This market rate is what they are paying to borrow the money for you from either their customers or other institutions. They pay those people a smaller amount of interest on the loan that they can lend to you for a higher rate to make a profit, also referred to as a spread. If it’s costing the bank more money to borrow, that cost will be downloaded on to the lender…

BLOGGED: Spotlight on Mortgages: June 7, 2013 http://t.co/hIadWelxbY

— RateSupermarket.ca (@RateSupermarket) June 7, 2013