Mortgage Rates to Drop for the First Time in 3 Months

Mortgage rates are dropping for the first time in more than three months, as bond yields fall.

Royal Bank announced Tuesday that it would be chopping its mortgage rates across the board by up to a fifth of a percentage point, effective Wednesday. TD Canada Trust and Bank of Montreal followed soon after and other banks are expected to do the same.

A five-year fixed mortgage will be 7.24 per cent, down from 7.44 per cent, the first major drop in mortgage rates since early March.

Just last week, Royal Bank led the banks in raising mortgage rates for the fourth time in four weeks.

But a week ago, bond yields were higher, and it is in the bond market where financing for mortgages is arranged.

The 10-year Government of Canada bond was yielding 4.63 per cent on Tuesday. That's a drop of a tenth of a percentage point from last Tuesday.

When bond yields drop, mortgage rates usually follow.

As a mortgage broker I the rates I get are fully discounted so we'll have to wait to see if the discounted rates drop.