Fixed rates in Canada are based off of the Canadian Government Bond Yields, then a margin is added and the fixed rate for the given term is worked out. In the past the margin was usually 1.25% to 1.50%, however that margin has had ti increase in the past year or so due to higher costs, so they now sit at around 1.75 – 2.00%.
Here is a snapshot of the current 5 year Government Bond Yield:
As you can see, the Bond Yields have gone up significantly in the last week and we anticipate slight bumps in the rates due to this…are we seeing the end of the super low rates? Perhaps, as it may never get down as low as it has been, however we don’t anticipate this to be a large march upwards in rates either. We expect the rates to slowly move in an upwards direction over the next 18 – 24 months, moving up perhaps .50% in total over that time from where we are currently.
Michael Anthony Lloyd