The Globe and Mail reports in its Wednesday edition that TD Bank is the first major Canadian lender to lower its posted rate for five-year fixed-rate mortgages amid falling bond yields. The Globe's James Bradshaw and Matt Lundy write that TD cut its posted rate on the popular five-year fixed term as federal officials and banks continue to face pressure to ease the burden that Canada's mortgage stress test puts on borrowers.
On Tuesday, TD lowered its posted five-year rate to 4.99 per cent from 5.34 per cent, and also cut its special rate on the same loan -- which is closer to what most borrowers actually pay -- to 3.09 per cent from 3.2 per cent.
The cost at which banks can borrow funds to make mortgage loans has fallen sharply as bond yields decline. Unease over the coronavirus outbreak, along with heightened geopolitical tensions between the United States and Iran, have dented confidence in economic growth, pushing more money into the bond market, sending yields lower as prices rise.
Canada's five-year bond yield dipped from 1.7 per cent at the start of the year to below 1.3 per cent this week. That has given banks breathing room to tweak mortgage pricing as the competitive spring housing season approaches.
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