As many of you are aware, when most mortgage lenders price their 5 year fixed rates, they do so with a spread above the Government of Canada 5 year Bond yield. Just before Christmas most lenders re-priced the 5 year fixed at 3.99%-4.04%, given a Government of Canada 5 year bond yield of about 2.48% at the time.

That same yield is now increase by 26 bps to 2.74% which has squeezed lenders’ spread significantly.

What does this all mean? à 5 year fixed rates are likely on the rise, industry wide, with estimate of about a 25 bps increase in fixed 5 year rates.