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Original perspectives and personal viewpoints on developments and industry trends.

Market Commentary: What happened with bond yields this week? Find out here

Aug 9, 2019
Capital Markets update
First National Financial LP

With our two Treasury Guys unavailable this week due to endless vacation time, all you are going to get this week is a dose of mortgage information!  I will not even try to compete with the eloquence and humour the Treasury Guys scribe each week.  Instead I will stick to the facts and may throw in the odd Big Lebowski or Spinal Tap reference.  I have endured a career of hearing educated professionals (i.e. bond people) say, “oh you’re just a mortgage guy”. Well, here goes.

I will focus my comments on CMHC financing where First National continues to operate as the multi-family market leader.  This past week we have seen global volatility driven by trade war headlines led to a rally in bond yields that resulted in 5 and 10 year Government of Canada bond yields in the low 1.20s.  Given the low rates, we are seeing exceptional demand for 10 year CMHC money in such quantities that we believe demand is outpacing supply industry wide.  As a reaction to the strong demand and to balance availability, on a limited basis, First National has started to offer 15 year and 20 year insured financing to its clients.  With this additional product offering we are able to offer our clients all terms from 1 to 20 years, plus insured construction financing.

Is it time to consider going very long on your insured loan?  Well consider that mortgage rates can be locked in currently in the 2.75% to 3% range for 15 to 20 years.  For long term holders of real estate this represents an opportunity to secure your largest expense therein allowing you to focus on operating the property as efficiently as possible.  Also recall that First National has various tools to allow you to increase your leverage over the term of the loan with either conventional or insured funds.

Anonymous Mortgage Guy

 

Hard to believe we are almost in mid-August, enjoy the last weekends of summer.  Don’t worry, kids go back to school soon!

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