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Bond yields up

Blog by Nick Swinburne | November 10th, 2010

An aquaintence in the mortgage business sent me this new flash today:

"Hi Nick

I was researching bond yields this morning and noticed that yet again the 3 and 5 year yields were up 20 basis points. They've been like this for a couple of days now and if this sticks could force banks to increase their fixed term mortgage rates. As fixed rate mortgages are priced in relation to the bond markets, these reducing spreads have compressed their earnings substantially.

We haven't seen any official announcements just yet regarding rate increases but if you have clients that haven't been pre-approved yet for a rate hold, now is a good time to do so in case rates change early next week. Or if their rate hold is expiring soon or sits higher than a 3.29% on a 3 year or 3.44% on a 5 year, this would be a great time for us to discuss getting them a better rate. A bank's mortgage specialist wont tell them about the great rate down the block...but as a mortgage broker, I will."