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June 2009

Found 1 blog entry for June 2009.

Calgary Real EstateLast week's move by Canadian lenders to raise their longer fixed term mortgage rates sparked some interesting discussions amongst clients. I thought it would be helpful to revisit what influences mortgage rates and discuss why Canadian mortgage rates are increasing.

Mortgage Rates & Bonds

Contrary to popular opinion, mortgage rates are not tied to interest rates *at least not directly*. Mortgage rates in fact are related to bonds and their yields (rates). Bonds are what are known as debt instruments, and Canadians have roughly 30 times more invested in debt markets *mainly bonds* than they have invested in equity markets *stocks*. The yield of a bond increases as the price of the bond falls. We won't get into the many variables affecting bond prices &

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