When it comes to speculating on mortgage rates and trends, focus on the fundamentals.  The statistics below will help keep you informed on the pulse of the Canadian economy.

Also, pay close attention to the bond market and their yields.  The relationship between bonds and mortgage rates is not new.  They tend to go up and down together.  To meet demand for customer loans, lenders borrow money in financial markets.  To ensure they are not taking interest rate risk, they will lock in the rate on the money they borrow to match the term of the mortgage.  For example, a 5-year fixed rate mortgage is funded by a 5-year fixed rate bond.

The yield, rate of return on your bond, can be read through a yield curve, which is the pattern of yields on bonds.  This increase in bond yield is something to watch.  If the bond yield continues to go up, the spread will continue to shrink and this could be a trigger for interest rates to rise.  Ideally lenders are looking for a spread between 1.70% and 1.80%.