It’s not getting any cheaper for banks to fund a fixed-rate mortgage. In fact, Canada’s 5-year swap rate, a common measure of 5-year funding costs at the big banks, is running at a 10-month high. Yet, still we’re seeing lenders trim 5-year fixed rates as the cut-throat spring market approaches. RBC chopped its 5-year fixed by 18 bps last week....
5-year fixed mortgage rates tend to shadow 5-year government yields. And for most of nine months, the 5-year yield has been locked in a 21-basis-point range, a range so tight it was practically inconceivable prior to COVID. And, while no one has ever seen a range like this in our lifetimes, ultimately the 5-year yield will break out. When that...
Lenders are not done sacrificing profit for market share. On Thursday, we hit yet another all-time low for 5-year fixed mortgage rates: 1.25%. That’s for default-insured mortgages only (like virtually all the lowest 5-year fixed rates). Insured or not, it’s a staggeringly low price for 5-year money. At 1.25%, this offer is just 31 basis points above the 5-year swap...
The Feds would like you to think they want to help first-time buyers. The Liberals’ over-hyped and costly First-time Home Buyer Incentive is a case in point. “The First-time Home Buyer Incentive makes it easier for you to buy a home,” they say. What the government omits to mention is that it’s stood by and allowed the mortgage qualifying rate...
Tangerine has ratcheted up its competitiveness. For non-default insured mortgages, it is suddenly the national leader on four fixed terms: 2-year fixed at 1.64% 3-year fixed at 1.59% (lowest refi rate in the country) 4-year fixed at 1.69%, and 10-year fixed at 2.14%. These are exceptional rates for uninsured mortgages (which include refinances and purchases over $1 million), particularly if...
Despite record-low short-term interest rates, most banks are offering junk 1-, 2- and 3-year rates on uninsured mortgages through the broker channel. We’re seeing 5-year variable pricing as low as 1.45% or less at major banks. Yet, on a one-year fixed, for example, they quote mortgage brokers over 2.40%. That’s well above the discretionary rates bank customers are reporting to...
Our national housing agency wants to put your mind at ease, sort of. CMHC published its annual stress test this week. Its report claimed CMHC would remain solvent barring a catastrophic scenario entailing: a 48% home price crash, 25% unemployment, and no government intervention (full details here). The report made headlines across the media, as unlikely as some of its...
The government’s “B20” stress test has blocked countless people from buying rental properties as investments. The current 4.79% minimum qualifying rate means would-be buyers have to prove they can afford mortgage payments far above what they’d really pay. Fortunately for some borrowers, there are alternative lenders (e.g., credit unions) that don’t impose the federal stress test. They qualify borrowers on...
In Brief Today’s Announcement:No change to rates Overnight rate:0.25% Prime Rate:2.45% (also no change; seePrime Rate) Market Rate Forecast:No BoC hikes until late 2022 BoC’s Headline Quote: “The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2% inflation target is sustainably achieved. In our projection, this does...
If you’ve got a hankering for a mortgage with maximum rate assurance, none beats the 10-year fixed. But once Canada rounds the corner on its economic recovery, 10-year rates could climb faster than other mortgage rates. The reason: 10-year terms reflect longer-term economic expectations than 5-year terms, for example. As a result, they often react more to changes in the...
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