[Kristi Hyson]

Originally Posted by Slava

Albert's right and knows what he's talking about here. The one thing I would note is that IRD is unlikely going forward for some time. Rates are low and (eventually) will go up. The IRD is the difference between what the bank is getting from you and what they would give a guy walking in off the street...if rates rise they aren't going to cut you a cheque, right?

Fixed mortgage rates are based on the bond market, as investor confidence increases the bond market will raise, thus directly effecting interest rates. The spreads will become tighter and interest rates will follow suit by increasing. The banks have no choice but to increase rates as the bond market strengthens, basically the banks are reactive to the change in the bond market and the consumer ultimately pays the higher interest rate as the economy grows stronger. Enjoy the low rates now...