Mortgage Rates Continue To Defy Expectations As Trump Runup Fizzles

Globe and Mail ~ April 26th, 2017

Here’s the least surprising news you’ll hear all day: Interest rates are not doing what most experts predicted.

Mortgage rates blasted off after Donald Trump’s presidential win last November. The narrative back then was that he’d trigger higher inflation and borrowing demand and potentially exacerbate credit risk – all of which are rocket fuel for interest rates.

But since then it’s been anti-climactic. The Trump-inspired runup in rates has fizzled like a North Korean missile launch. Investors now question Congress’s ability to enact any meaningful economic stimulus this year.

That and a fickle economy have put the beat-down on Canada’s five-year bond yield. The five-year yield, which influences fixed-mortgage rates, has given back half of its gain since the U.S. election.

That’s caused five-year fixed-mortgage rates to sink about 20 basis points (A basis point is 1/100th of a percentage point) from their recent 52-week high. You can now snag a five-year-fixed for as little as 2.17 per cent on default-insured purchases and 2.49 per cent for refinances.

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