Cracks in Real Estate: Home sales have plunged. No secret there. But new data from HouseSigma gives us a hint of how much, at least in the Greater Toronto Area. Raw year-over-year sales data shows that during the first three weeks of April, GTA home sales have nosedived from 11,777 to just 4,027, down roughly 66%. And properties for sale (listings) remain relatively low, for now. (Note to readers: The comparison period dates are off by a few days for calendar reasons, but the magnitude of the drop is nonetheless indicative. As well, this reflects sold data reported by the Toronto real estate board, which occasionally includes areas outside the GTA.) HouseSigma also estimates the April median GTA home price at $733,000. That’s down 7% from the peak two months ago. We’ll get the next batch of official nationwide numbers in a few weeks.
Hidden 5-Year Rates: The lowest rates sometimes aren’t in plain view. Case in point: Scotiabank’s eHOME rates for people willing to arrange a mortgage online. It’s advertising a 2.37% uninsured 5-year fixed rate, by far the lowest in Canada that we’re aware of. Unfortunately, the eHOME website restricts these rates to purchases only and rates vary by borrower. But we’re also seeing existing Scotia renewal clients being offered sub-2.39% eHOME rates as well. That shows how cut-throat mortgage pricing has become as application volumes plummet with home sales.
Years of Cheap Oil: “This is very reminiscent of a time in the mid-1980s when exactly the same situation happened [in oil] – too much supply, too little demand and prices of oil stayed low for 17 years,” says BP’s CEO. Sixty per cent of oil is used for transportation, and COVID, climate change sensitivity and shifts in energy preferences have shrunk—and continue to shrink—that demand. Producers know this and some will try to sell as much of their oil as possible before global demand slows even more. Canada’s oil-dependent economy may never be the same because of it (despite temporary price spikes from the inevitable post-pandemic supply shortages). Cheap oil and industry contraction are macro disinflationary trends that will weigh on Canadian mortgage rates for years, without most people even realizing it.
Quick Rebound in Question: For those wondering if a stock market recovery might boost mortgage rates, note that over the past 17 market crashes, stocks required an average of about 30 months to return to their peak.
Inflation Falling: Average core CPI inflation was 1.8% in March, the lowest since January 2018. “…We expect headline inflation to drop below zero in April,” predicts Capital Economics.
Like news like this?
Join our ratespy update list and get the latest news as it happens. Unsubscribe anytime.
I think this ‘dramatic’ drop is expected and not a fair comparison. Given that the lockdown and even though real estate is considered an essential service, no one wants to let a stranger through their home unless they have to.
Rather than compare this year over year, we should compare it relative to drops in other industries.
For example, there’s likely a 99% drop in theatre attendance.
While Scotiabank’s eHOME rate of 2.37% might be the lowest uninsured 5-year fixed rate, HSBC still leads among the large banks with its 2.34% insured 5-year fixed rate.
Chris, Sales changes are always measured against benchmarks. Most commonly the benchmark for real estate is the same period in the prior year. People understand the main housing driver right now as it’s been reported here and elsewhere repeatedly. Either way, sales are down significantly and that’s a fact. Facts are not fair or unfair, they just are. A comprehensive analysis of the how and why is not always possible with every update. That’s why it’s great to see folks like yourself debating the data with added depth. And that’s why we report this stuff and maintain this open forum. Cheers…
Hey Spy! I’m getting a 4 yr fixed @ 2.64 for an upcoming renewal and am pretty keen on that however keep calculating my risk/reward scenario for the other option: 3 yr variable @ Prime – 0.2 (effectively 2.3 as per cibc) Figuring the next 6-12 months will be enjoying low interest rates and then the next 24 months lock in at whatever higher fixed rate is available — what are your thoughts?
For most people, trying to time rate locks is like betting black on the roulette wheel. The house has the edge. Rates usually jump before the borrower knows to act. The bond market can move fast. Moreover, people often need to switch lenders to get a good fixed rate because their lender’s “conversion rate” is subpar. And there are fees and penalties for switching. While I can’t recommend a term for you in this forum, 2.64% is an decent enough 4yr rate if there are no better options, and for a well-qualified borrower a 4yr is better than a 5yr in a low-inflation world. Prime – 0.20%, however, is garbage and not worth the risk IMO unless there’s a higher-than-normal probability of breaking the mortgage early. By all means, shop rates aggressively to see if you can find a good terms at a better price.
I agree with Chris that it’s not fair comparison for real estate data generated during Covid 19. They are certainly not real numbers. However, the response from Spy convinced me too. They are numbers and we have to take it as it is. The market still will take some time to recover after the pandemic is over. Lots of potential buyers have lost their jobs and wont be back to work immediately.
Cut the “it’s not fair” bullcrap. Home sales stink because of Covid. So what. Should everyone ignore the numbers because of the reason sales are down? People can justify the weakness all they want but here’s a newsflash for you, prices are going DOWN. All people want to know is how far and for how long. Everything else is blabber.
Want to clarify my earlier comment about not being a fair comparison. What I really mean is that it’s not a ‘relevant’ comparison. Covid-19 is obviously making this data an outlier and saying that there is a ‘crack in the real estate market’ is not relevent or correct. Just because sales dropped during Covid-19 doesn’t mean the sky is falling. I agree that prices will drop but that doesn’t mean that every homeowner will run for the door and push the sell button at whatever the cost. There will be price drops but the majority (95%+) of people will stay put and wait for the dust to settle.
I would argue that like other industries impacted by the lock down, the industry is a ‘pause’ and will will resume at a later time. Prices will drop due to less buyers as a result of job loss, etc. and there will be the exception who needs to sell without delay (eg. new job, moving, etc.) but the majority will view this as a pause and resume once things get back to normal, unless we can’t develop the vaccine, then it’s a different outcome.
Chris, Thanks for the comment but simply could not disagree more. A 66% sales drop amid the deepest plunge in employment and GDP of all time is not healthy, regardless of the reason. No need to debate that. That’s not to say prices must crash. The year-over-year reference is simply the customary way to compare sales data.
Bank of Canada dropped their daily bank rate twice, but the commercial banks failed to follow: Why? Greed, greed, greed!
If the PMO had any genitals, they would coerce the banks to lend at reasonable rates!
When I locked in with Scotiabank, it was at 2.47 fixed for 5 years. They guaranteed me the best rate up until signing. I have been monitoring the updates on here daily, and was happy to see the update yesterday about hidden rates at Scotiabank being amongst the lowest for 5 year uninsured at 2.37-2.39%. I wrote our contact, and told her that we would like that rate before we close on Monday, and she keeps telling me that the best rate they have presently in branch is 5 yrs at +/- 2.53% or that the best rate for the 5 yrs is 2.69%. Not even sure why those are different. But either way, I’m discouraged because I feel as though the best rate is not being guaranteed – and that because I don’t have access to the ‘hidden rates’ I can’t accurately advocate on my own behalf. Thank you for this site and your frequent updates. But it seems even with my due diligence and staying ‘up to speed’ as my closing date approaches, best rate guarantees aren’t a real thing. I’ve been locked in, and now that they have me and closing is approaching, Scotiabank is not honoring their commitment and there’s nothing I can do?
Hi TJ, Is it for purchase financing? If so, Scotia’s best rates are usually on eHOME. Their Home Financing Advisors and brokers often cannot match them. I heard from a Scotia rep yesterday who quoted me the following, which are all higher than eHOME rates (albeit eHOME doesn’t apply to refis and non-owner-occupied rental properties):
How would one access these lower eHome rates when renewing with Scotia (5-year fixed)? My mortgage is coming up soon, and my mortgage advisor is quoting much higher rates.
Same here with a 5 year renewal with Scotia . We are being told 2.69 and I can not find anywhere to say it’s cheaper . I don’t think my broker is giving me the best rates. Another broker gave me a better deal with Scotia but first broker sent my application in and now Scotia won’t deal with the second broker who offered us a better deal
Scotiabank-approved brokers cannot match e-home rates. It is not their fault. The issue is that Scotiabank has decided to undercut all of its brokers and mortgage specialists with these online only rates. As a broker I find it very upsetting but I know why they do it. They don’t have to pay commissions to a computer.
Johnathan It is such a weird system. I have 2 brokers with different rates . Trying to contact my current lender and get them to give me a decent deal is non existent. I can get a better deal with a broker then me refinancing with my current lender. Our credit is great and payments always been done so we figured the easiest was to stay with them. Scotia does offer to cover costs and their rates are decent from one broker but I am seeing they are offered to others at a better rate. I have asked my broker and she says that’s all she can get is 2.79 (sorry I reported 2.69 previously) So many better rates out there that are hidden. Any suggestions on how to get this broker to reduce this rate ? I have asked her already Thanks
Hey Karen, We’re aware of all the bank’s rates and I can tell you that the broker will not have any room to buy down the rate that much, assuming you want to stay with the bank.
Thank you for your response. To answer your question, yes, it’s for a mortgage to purchase a home. This is what Scotia head office told my local branch manager:
“eHome is a fully digital mortgage experience for customers who prefer to complete their mortgage journey without any assistance from a trusted Advisor. Rates at times may be lower in eHome than other Channels as we try to pass on the digital cost savings to the customer. As of today, eHome is not available in Quebec. The team is working on getting eHome fully bilingual and aligned with Quebec’s mortgage policies for launch later this year. In regards to rate matching, RESL pricing strategy is that it doesn’t match the rate available in eHome in any other distribution channels.
I had a closer look and the Branch quoted this customer a fantastic 5 year fixed at 2.47% for an uninsured mortgage in the Branch Channel. The 2.37% rate that the customer is quoting is not available currently in eHome for this transaction.”
I should mention that I’m in Quebec, as a result, when I looked up eHome after reading this article I noticed it was not available in Quebec. And while their eHome site says “Don’t worry, our trusted financial advisors are there to help you” if you live in Quebec, what they really mean is “too bad, so sad – if you’re a Quebec resident you’ll never get the eHome rate, because Scotia won’t allow your trusted Scotia financial advisor to match that rate”.
Again thanks for everything your site is doing – it’s been a huge learning curve for me and the information available on this site as been my main source of information to be an informed mortgage shopper!
Hi TJ, Many thanks for sharing this response. Of particular interest is: “RESL pricing strategy is that it doesn’t match the rate available in eHome in any other distribution channels.” That is likely the way of the future for big banks. Mortgage origination costs are simply much lower with machine processing.
I am with Scotia too. I can see online 2.55 for refinancing. I am a little annoyed that I can not get a better rate, especially after reading some of the other comments. I have an excellent credit score, very low loan to equity ratio. So I am holding off. I might even pay off my mtg from my HLOC and wait a couple of months.
TJ, plug in the numbers and look at the difference in the numbers. .09% will likely mean a few bucks difference in payment…a few more if you’re paying 2 million for a house in Vancouver or Toronto.
Maybe you’re a, “It’s the principle of not getting the absolute lowest rate when it was promised to me! Maybe if you dealt with the eHOME you’d get that rate.
Not trying to be rude, but just enjoy your awesome rate and don’t quibble over a few bucks and just enjoy the great deal you got.
John the Great..
Just also seeing if your rate comment was a refinancing rate or finance?
I have found refinancing rates a bit higher. Can you post the website you found this ?
Thanks
log in
33 Comments
I think this ‘dramatic’ drop is expected and not a fair comparison. Given that the lockdown and even though real estate is considered an essential service, no one wants to let a stranger through their home unless they have to.
Rather than compare this year over year, we should compare it relative to drops in other industries.
For example, there’s likely a 99% drop in theatre attendance.
Meanwhile banks won’t lower their posted rates from 5%. What a joke.
https://www.ratespy.com/best-bank-mortgage-rates
Hey Dave, Another reminder why the government is acting to unlink the mortgage stress test rate from banks’ sticky posted rates.
While Scotiabank’s eHOME rate of 2.37% might be the lowest uninsured 5-year fixed rate, HSBC still leads among the large banks with its 2.34% insured 5-year fixed rate.
That’s right Alex, and some brokers are even lower on insured rates.
Chris, Sales changes are always measured against benchmarks. Most commonly the benchmark for real estate is the same period in the prior year. People understand the main housing driver right now as it’s been reported here and elsewhere repeatedly. Either way, sales are down significantly and that’s a fact. Facts are not fair or unfair, they just are. A comprehensive analysis of the how and why is not always possible with every update. That’s why it’s great to see folks like yourself debating the data with added depth. And that’s why we report this stuff and maintain this open forum. Cheers…
@Chris: What’s amazing to me is that there will likely be 3,000 or so firm sales on TRREB this month.
During a lock-down pandemic!
Hey Spy! I’m getting a 4 yr fixed @ 2.64 for an upcoming renewal and am pretty keen on that however keep calculating my risk/reward scenario for the other option: 3 yr variable @ Prime – 0.2 (effectively 2.3 as per cibc) Figuring the next 6-12 months will be enjoying low interest rates and then the next 24 months lock in at whatever higher fixed rate is available — what are your thoughts?
Hi Ned,
For most people, trying to time rate locks is like betting black on the roulette wheel. The house has the edge. Rates usually jump before the borrower knows to act. The bond market can move fast. Moreover, people often need to switch lenders to get a good fixed rate because their lender’s “conversion rate” is subpar. And there are fees and penalties for switching. While I can’t recommend a term for you in this forum, 2.64% is an decent enough 4yr rate if there are no better options, and for a well-qualified borrower a 4yr is better than a 5yr in a low-inflation world. Prime – 0.20%, however, is garbage and not worth the risk IMO unless there’s a higher-than-normal probability of breaking the mortgage early. By all means, shop rates aggressively to see if you can find a good terms at a better price.
I agree with Chris that it’s not fair comparison for real estate data generated during Covid 19. They are certainly not real numbers. However, the response from Spy convinced me too. They are numbers and we have to take it as it is. The market still will take some time to recover after the pandemic is over. Lots of potential buyers have lost their jobs and wont be back to work immediately.
Cut the “it’s not fair” bullcrap. Home sales stink because of Covid. So what. Should everyone ignore the numbers because of the reason sales are down? People can justify the weakness all they want but here’s a newsflash for you, prices are going DOWN. All people want to know is how far and for how long. Everything else is blabber.
Scotiabank eHome is showing me 2.42% on uninsured 5 year fixed closed
Hi Tim, Rates can sometimes vary by application specifics, like loan amount and location. Here’s what I see right now: http://prntscr.com/s4e7t2
Cool – thanks!
Want to clarify my earlier comment about not being a fair comparison. What I really mean is that it’s not a ‘relevant’ comparison. Covid-19 is obviously making this data an outlier and saying that there is a ‘crack in the real estate market’ is not relevent or correct. Just because sales dropped during Covid-19 doesn’t mean the sky is falling. I agree that prices will drop but that doesn’t mean that every homeowner will run for the door and push the sell button at whatever the cost. There will be price drops but the majority (95%+) of people will stay put and wait for the dust to settle.
I would argue that like other industries impacted by the lock down, the industry is a ‘pause’ and will will resume at a later time. Prices will drop due to less buyers as a result of job loss, etc. and there will be the exception who needs to sell without delay (eg. new job, moving, etc.) but the majority will view this as a pause and resume once things get back to normal, unless we can’t develop the vaccine, then it’s a different outcome.
Chris, Thanks for the comment but simply could not disagree more. A 66% sales drop amid the deepest plunge in employment and GDP of all time is not healthy, regardless of the reason. No need to debate that. That’s not to say prices must crash. The year-over-year reference is simply the customary way to compare sales data.
Bank of Canada dropped their daily bank rate twice, but the commercial banks failed to follow: Why? Greed, greed, greed!
If the PMO had any genitals, they would coerce the banks to lend at reasonable rates!
When I locked in with Scotiabank, it was at 2.47 fixed for 5 years. They guaranteed me the best rate up until signing. I have been monitoring the updates on here daily, and was happy to see the update yesterday about hidden rates at Scotiabank being amongst the lowest for 5 year uninsured at 2.37-2.39%. I wrote our contact, and told her that we would like that rate before we close on Monday, and she keeps telling me that the best rate they have presently in branch is 5 yrs at +/- 2.53% or that the best rate for the 5 yrs is 2.69%. Not even sure why those are different. But either way, I’m discouraged because I feel as though the best rate is not being guaranteed – and that because I don’t have access to the ‘hidden rates’ I can’t accurately advocate on my own behalf. Thank you for this site and your frequent updates. But it seems even with my due diligence and staying ‘up to speed’ as my closing date approaches, best rate guarantees aren’t a real thing. I’ve been locked in, and now that they have me and closing is approaching, Scotiabank is not honoring their commitment and there’s nothing I can do?
Hi TJ, Is it for purchase financing? If so, Scotia’s best rates are usually on eHOME. Their Home Financing Advisors and brokers often cannot match them. I heard from a Scotia rep yesterday who quoted me the following, which are all higher than eHOME rates (albeit eHOME doesn’t apply to refis and non-owner-occupied rental properties):
5yr fixed insured – 2.40%
5yr fixed with 25yr amz – 2.50%
5yr fixed with 30yr amz – 2.60%
5yr fixed rental property – 2.75%
Variable with 25 yr amz – 2.30%
Variable with 30 yr amz 2.35%
How would one access these lower eHome rates when renewing with Scotia (5-year fixed)? My mortgage is coming up soon, and my mortgage advisor is quoting much higher rates.
Hi Sam, Not sure to be honest. I know they’re online but don’t know which renewers Scotia makes them available to. Have you tried the renewal feature in the Scotiabank app? –> https://www.scotiabank.com/ca/en/personal/ways-to-bank/mobile-tablet/mobile-banking-app/features.html
Same here with a 5 year renewal with Scotia . We are being told 2.69 and I can not find anywhere to say it’s cheaper . I don’t think my broker is giving me the best rates. Another broker gave me a better deal with Scotia but first broker sent my application in and now Scotia won’t deal with the second broker who offered us a better deal
In response to Karen:
Scotiabank-approved brokers cannot match e-home rates. It is not their fault. The issue is that Scotiabank has decided to undercut all of its brokers and mortgage specialists with these online only rates. As a broker I find it very upsetting but I know why they do it. They don’t have to pay commissions to a computer.
Johnathan It is such a weird system. I have 2 brokers with different rates . Trying to contact my current lender and get them to give me a decent deal is non existent. I can get a better deal with a broker then me refinancing with my current lender. Our credit is great and payments always been done so we figured the easiest was to stay with them. Scotia does offer to cover costs and their rates are decent from one broker but I am seeing they are offered to others at a better rate. I have asked my broker and she says that’s all she can get is 2.79 (sorry I reported 2.69 previously) So many better rates out there that are hidden. Any suggestions on how to get this broker to reduce this rate ? I have asked her already Thanks
Hey Karen, We’re aware of all the bank’s rates and I can tell you that the broker will not have any room to buy down the rate that much, assuming you want to stay with the bank.
Hi Spy,
Thank you for your response. To answer your question, yes, it’s for a mortgage to purchase a home. This is what Scotia head office told my local branch manager:
“eHome is a fully digital mortgage experience for customers who prefer to complete their mortgage journey without any assistance from a trusted Advisor. Rates at times may be lower in eHome than other Channels as we try to pass on the digital cost savings to the customer. As of today, eHome is not available in Quebec. The team is working on getting eHome fully bilingual and aligned with Quebec’s mortgage policies for launch later this year. In regards to rate matching, RESL pricing strategy is that it doesn’t match the rate available in eHome in any other distribution channels.
I had a closer look and the Branch quoted this customer a fantastic 5 year fixed at 2.47% for an uninsured mortgage in the Branch Channel. The 2.37% rate that the customer is quoting is not available currently in eHome for this transaction.”
I should mention that I’m in Quebec, as a result, when I looked up eHome after reading this article I noticed it was not available in Quebec. And while their eHome site says “Don’t worry, our trusted financial advisors are there to help you” if you live in Quebec, what they really mean is “too bad, so sad – if you’re a Quebec resident you’ll never get the eHome rate, because Scotia won’t allow your trusted Scotia financial advisor to match that rate”.
Again thanks for everything your site is doing – it’s been a huge learning curve for me and the information available on this site as been my main source of information to be an informed mortgage shopper!
Hi TJ, Many thanks for sharing this response. Of particular interest is: “RESL pricing strategy is that it doesn’t match the rate available in eHome in any other distribution channels.” That is likely the way of the future for big banks. Mortgage origination costs are simply much lower with machine processing.
I am with Scotia too. I can see online 2.55 for refinancing. I am a little annoyed that I can not get a better rate, especially after reading some of the other comments. I have an excellent credit score, very low loan to equity ratio. So I am holding off. I might even pay off my mtg from my HLOC and wait a couple of months.
Hey John,
On what website did you see 2.55% for a Scotia 5 year fixed refinance? Can you paste the link here?
Thanks a lot
TJ, plug in the numbers and look at the difference in the numbers. .09% will likely mean a few bucks difference in payment…a few more if you’re paying 2 million for a house in Vancouver or Toronto.
Maybe you’re a, “It’s the principle of not getting the absolute lowest rate when it was promised to me! Maybe if you dealt with the eHOME you’d get that rate.
Not trying to be rude, but just enjoy your awesome rate and don’t quibble over a few bucks and just enjoy the great deal you got.
John , 2.55 is great for a refi, don’t quibble. You can see better rates elsewhere but they are likely more restrictive.
I’m renewing with Scotia too and I see the 2.55 as my best rate to renew online. Called MTG department and 2.58 was the best they could do.
Branch may meet better rate, HBC?, but they need AGM approval. I had asked earlier and they said….stuff it. Online is your best option.
John the Great..
Just also seeing if your rate comment was a refinancing rate or finance?
I have found refinancing rates a bit higher. Can you post the website you found this ?
Thanks
For me, my rate to renew online says 2.55%, and my Scotiabank broker was able to get me 2.53%…