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Originally Posted by opendoor
They're not. Variable rate mortgages generally move in lockstep with the BoC rate both up and down. Fixed rates move with bond yields, again both up and down. Two different types of mortgages with each having their own thing driving the rates.
But bond yields are primarily based on the market's prediction of future rate trajectories, so fixed rates will normally move before variables do. So they went up significantly before the first interest rate increase in 2022 and started dropping 6-7 months before the first rate cut.
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Thank you for this, I’ll be doing some research on bond rates and how they are set. Do you have any starting points on where I should look?
I did some basic reading describing the handful of formulas used in judging a bonds performance, but I’d like to understand the purpose and back story more before I care about the “how” of bonds.