Variable rates on new mortgages could get a little cheaper this quarter, for one of four reasons, or maybe all four: Bankers’ acceptance (BA) rates — a general proxy for variable-rate funding costs — are at an all-time low. That’s boosted the spread between prime rate and BAs to almost a 12-year high. Think of that spread as a rough...
The bad news: COVID cases have exploded, hospitalization numbers are surging and most people may be slow to get vaccinated. The good news: the fatality rate is dropping and vaccine distribution could start next month. The question is, which news will the bond market pay more attention to? Our guess is the latter. Black swans aside, markets often discount major...
—The Mortgage Report: Aug. 16— HSBC Cuts HSBC slashed a bunch of key rates going into the weekend, setting record lows on a variety of terms. That included reductions to these special fixed rates: 3yr: 2.19% to 1.99% Canada’s lowest-ever 3yr refi rate 5yr: 2.09% to 1.96% Canada’s lowest-ever 5yr refi rate 5yr (high ratio): 1.89% to 1.76% Canada’s lowest-ever...
Effective this week, it gets a little easier to buy a house or refinance. On Saturday, BMO and CIBC shaved 15 basis points off their posted 5-year fixed rates. That’s enough to drop the benchmark 5-year posted rate to 4.79%. Given regulators use this benchmark rate to calculate Canada’s minimum mortgage stress test, today’s cuts mean you’ll now need less...
—The Mortgage Report: July 16— Falling Equilibrium: The Bank of Canada now estimates that Canada’s “neutral rate” is 25 bps lower than it was last year. The neutral rate is the policy interest rate that keeps inflation at its 2% target without stimulating or slowing the economy over the medium to long term. The Bank now pegs neutral at 2.50%,...
—The Mortgage Report: July 3— Long Road Back for Jobs: Avid rate watchers all want to know the same thing: how long will unemployment stay elevated? The answer to that is essential to knowing how long rates could remain in a trough. On Thursday, we got a sobering projection from a reputable source. The non-partisan Congressional Budget Office (CBO) says...
Mortgage Report – May 14 De-Stressing: Call out the marching band, BMO’s posted 5-year rate cut today should ease the government’s mortgage “stress test,” effective next week. As it stands, the minimum stress test rate will likely fall from today’s 5.04% to 4.99%. It’ll mark the first time since January 2018 (when OSFI’s stress test began) that this benchmark rate...
A fourth major bank has cut its posted 5-year fixed rate today. This time it’s BMO. The move comes four long months afterthe 100+ basis-point collapse in 5-year bond yields. Such a delay in reducing posted rates after large, market-wide rate drops is unusual historically speaking, as we’veexplainedpreviously. See the chart below for more perspective. BMO’s cut today has implications...
One week ago BMO stunned competitors with arecord variable-rate discount. Now, one of its juggernaut competitors—TD—is responding. TD has just matched BMO’s special with its own prime – 1.00% offer (“TD prime” – 1.15%, to be exact). That ties BMO for Canada’s lowest variable rate on an uninsured mortgage. Remember, uninsured rates are required if you’re refinancing, buying a home...
BMO has come out swinging with its latest spring promo. The country’s fourth largest bank is advertising a red-hot prime – 1.00% variable. At 2.45% currently, it’s now the best variable rate for refis in the country. This special is also the largest widely advertised big-bank variable discount we’ve ever seen. As of press time, we’re still getting details and...
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