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Monday Mortgage Update: January 9, 2012

Happy New Year to all our readers! We hope your Holidays were filled with joy and turkey, but now it’s time to return to work. This past year had many twists and turns and we recapped all the 2011 mortgage trends including the new mortgage rules as well as an outlook for what to expect for mortgage rates in 2012.

According to the Bank of Canada, Government of Canada (GoC) bond yields all finished down last week. That includes the 2-year, 3-year, 5-year, 7-year, and 10-year bond yields. Although the 5-year GoC bond yield finished 6 basis points lower at the end of last week, we haven’t really seen a translation into 5-year fixed rate discounts on The best current 5-year fixed rate is 3.19%, which is actually up 5 basis points from last week.

The best 5-year variable rate remains untouched at Prime -0.25% or 2.75%, where it has been since the middle of December.

Interesting news emerged from Macleans last week regarding the recently bankrupt UM Financial, an Islamic finance company that provided mortgages to 170 Muslims. Since the use and acceptance of interest is forbidden under Sharia law, UM Financial set up a unique mortgage financing plan for its clients. Homebuyers would pay rent, as opposed to interest, to the mortgage lender, while gradually buying off the outstanding share of the property. The mortgage borrower would not receive ownership until the principal was fully paid off. Now that UM Financial is belly up, its clients are left in a legal limbo. Who ultimately owns the house – the bank or the borrower? It’s an interesting dilemma that will keep an eye on.

Where areCurrent Mortgage Ratesthis week?

A history of discounted weekly 5-year fixed mortgage rates and 5-year variable mortgage rates

Canadian mortgage rate trends

What mortgage products are Canadians buying?

Mortgage popularity through this past week remained much the same as the end of 2011, with 5-year fixed and 5-year variable rates taking up approximately two thirds of mortgage product interest. 5-year variable open rates, which typically is as popular, made a brief appearance last week. The current 5-year variable open rate is 3.25%.

Note:  This is simply a small sample size and does not represent the entire market. It does, however, offer some useful insight.