🚀 go-pugleaf

David Alexander Johnston (di793@FreeNet.Carleton.CA) writes:
> does anyone know if the spread between  the prime rate and the
> rate at which mortgages are at has been increasing?
> It certainly seems that way considering how low the bank rate has
> gone .

Well, the last reduction of 25 basis points in the bank rate has 
not been matched by a mortgage rate reduction.

Not only that but on December 18, 1996, the Globe reported that a 
selloff in debt markets prompted Canada Trust to increase their 
mortgage rates. The increase affected terms of two to 10 years, 
raising rates between 25-30 basis points. No other banks followed, 
and Canada Trust reversed the increase after a few days. However, 
they did not lower their GIC rates correspondingly, which makes me 
wonder whether they expect the rates to climb again soon.

According to the Globe the rationale for the increase in the first 
place was the �carnage in the bond market that has been lifting 
yields sharply higher. The massive selling in North American debt 
markets this month was a warning sign that mortgage rates could be 
about to rise. Bond yields are a benchmark of long-term interest 
rates and reflect the cost of funds that financial institutions 
then lend in the form of mortgages. Since the beginning of the 
month, five-year bond yields have climbed by 60 basis points.�