Bonds are above 3% – What does it mean for Fixed Rates?

On Monday April 5th, 2010 the 5 year government bond yield has increased above 3% for the first time since October 2008.

Today the yield hit a 17 months high of 3.05%.

What does this mean for fixed mortgage rates? The 5 year yield drives the 5 year fixed mortgage rate. As we saw last week the banks have raised the fixed rates as the bond yield increased, if the trend continues we will see another increase in fixed rates in the near future.

Keep your eye on the government bond yields if you are looking to lock in your mortgage.

Here is a good article from Financial Post about government bonds and fixed mortgage rates.