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  #1  
Old 06-12-2009, 01:37 PM
Steven Steven is offline
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Default Interest rates on lines of credit

I read somewhere that TD bank increased their 5 year locked mortgage rate twice for less than 2 weeks? Is the same trend going to affect lines of credit? Are interest rate son credit lines going up as well?
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  #2  
Old 06-12-2009, 02:24 PM
Tightwod Tightwod is offline
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Mortgage rates have more to do with forward looking guestimates of the banks economists. LOC rates (short term variable) are typically reactionary to the Bank of Canada Prime Lending rate. That said, the bank is not obligated to follow the rule. But if they don't you can take your debt elsewhere. Also, with the rate hike on the 5yr they are saying that they think Prime will be higher in five years then they thought it would be 2 weeks ago.
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  #3  
Old 06-15-2009, 01:16 PM
Canadian Canadian is offline
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LOC rates will follow soon enough in my opinion. First I expect another leg down in equity markets and after this happens, rates will continue rising faster than most people can imagine.
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  #4  
Old 06-16-2009, 02:19 PM
Steven Steven is offline
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Quote:
Originally Posted by Canadian View Post
LOC rates will follow soon enough in my opinion. First I expect another leg down in equity markets and after this happens, rates will continue rising faster than most people can imagine.
How can you be so sure, please clarify?
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Old 06-17-2009, 02:05 PM
trent trent is offline
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Quote:
Originally Posted by Steven View Post
How can you be so sure, please clarify?
Read about the relationship between bonds and interest rates:

http://www.gatherlittlebylittle.com/...st-rates-rise/
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  #6  
Old 06-18-2009, 02:35 PM
Canadian Canadian is offline
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Interest rates are at record low, and they cannot simply go lower. When interest rates are artificially low, this creates all kinds of distortions into various markets (look at housing for example). Here is another article to help you understand the link between bonds and interest rates:

http://www.canada.com/want+know+wher...695/story.html
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  #7  
Old 06-18-2009, 06:31 PM
Tightwod Tightwod is offline
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Neither one of those articles does anything to explain how interest rates are set. I agree rates will increase, they can't go down any further. It is not because mortgage rates are going up or that bond yields are going up. It has to do with Fiscal & monetary Policy, Micro & macro economics, and there are so many factors that go into decisions relating to these that you could never answer it. It comes down to the fact that we are in a economic slow down, governments around the world have decreased lending rates so much in an attempt to control inflation & growth and yada yada yada that the banks must also. and when you can't decrease rates any more and the economy is in the crapper and the banks loans are becoming more risky inevtiably they need to raise rates to offset their risks. But I don't really have any idea!! Ha ha!
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Old 06-18-2009, 06:44 PM
Canadian Canadian is offline
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It's very simple really. Long-term bond yields had a nice run-up in recent weeks. Rising bond yields ultimately translate into rising borrowing costs.
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Old 06-19-2009, 02:20 PM
bullish bullish is offline
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There is virtually no inflation right now:

http://www.theglobeandmail.com/repor...rticle1186866/

and you cannot expect to see rates rising when there's no inflation.
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  #10  
Old 06-22-2009, 05:44 PM
Tightwod Tightwod is offline
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Quote:
Originally Posted by Canadian View Post
It's very simple really. Long-term bond yields had a nice run-up in recent weeks. Rising bond yields ultimately translate into rising borrowing costs.
When Bonds rise in price the yields come down. I don't understand what your saying.
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