For those of us who are not economists, some of the interconnected financial systems can be baffling. Experts are predicting that five year mortgages in Canada could start to creep up as the economy of our neighbours south of the border gains pace.
Here’s how it works. Our five year mortgages are generally tracked on the yields of government bonds; when the U.S. economy is weak the value of their bonds (and ours) fall, which triggers a drop in mortgage rates. As the U.S. economy improves and bonds increase in value again,
mortgage rates rise.
Some economists are forecasting rapid growth for the U.S. economy which could mean some painful rate rise for homeowners in Canada.
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