It seems central bankers can’t keep the United States economy down — despite a 23-year high in the world’s most important interest rate, the U.S. Fed funds rate.
That’s a problem if you’re craving lower mortgage rates. U.S. Federal Reserve policy ripples through global borrowing costs, including Canada’s. With real-time U.S. GDP estimates tracking at well over three per cent, there’s a fear in the back of investors’ minds that the U.S. economy may be too strong, creating upside risk in inflation. Canadian bond yields are getting caught in the updraft.
Higher yields usually lift fixed mortgage rates, so mortgage watchers are on the lookout for any rebound in borrowing costs. Lenders have some leeway, though, and competition is stiff. It’ll probably take more bond selling (yields rising) before big banks lift fixed pricing en masse.
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