Variable Discounts Start Improving: This week, we reported that falling risk premiums are helping to lower costs for mortgage lenders. And it’s starting to pay off. In the last few days, we’ve seen various lenders start to drop 5-year fixed rates 10 bps or so, as well as cut variable rates (i.e., improve their discounts) by 10 to 20 bps....
Good News for Variables: There’s hope for better variable rates yet. The “prime – BA spread” is widening (getting bigger). That means banks may soon be making more money on variable mortgages, which eventually means they’ll offer better discounts off prime rate (for new borrowers). With the Prime-BA spread back to 1.66%, the pressure to raise variable rates has subsided....
3:14 p.m. Update A Half Million Mortgage Deferrals: That’s what banks are up to now, says the Canadian Bankers Association. And that doesn’t include non-bank lenders. More than 10% of Big 6 bank borrowers are now skipping/deferring mortgage payments, a number the CBA says will “increase over the coming weeks.” All told, deferrals have freed up $663 million of monthly...
4:47 p.m. Update Rubber Stamping: TD’s CEO says the bank is approving “virtually all” mortgage deferral requests. It has approved 60,000 so far. “If this [crisis] continues for a longer period, governments will act [again]…” he said. He also noted that TD is not seeing a “dramatic” increase in HELOC borrowing thus far. That begs the question, how does he...
Sub-1% Rates: One of the greatest economic tragedies in Canada’s history is unfolding before our eyes. When we talk about how low mortgage rates are, it can’t be stressed enough that no one wanted this to be the reason for it. But if there’s one silver lining, it’s variable-rate borrowing costs. 1 in 5 borrowers took out a variable-rate mortgage...
11:23 a.m. Update Notable Moves: The day’s top rate changes: BMO lowers its posted variable rates by 50 bps in line with the drop in prime: 3yr open: 4.65% to 4.15% 5yr closed: 3.45% to 2.95% HSBC improved these rates specials: 5yr fixed (refis): 2.79% to 2.69% 5yr fixed (high ratio): 2.49% to 2.39% 5yr variable (refis): 3.15% to 2.65%...
11:53 p.m. Update Fleeting Deal: Canada Life’s stellar 5-year fixed deals (2.34% insured and 2.49% uninsured) could vamoose this week. If a fixed 5-year is suitable for your circumstances and if you’re closing in the next 90 days, it’s a hard deal to beat. Unfortunately, for those who like a long payback period, Canada Life only allows up to a...
Despite rates being less than a point from their all-time lows, borrowers are growing increasingly dissatisfied with shrinking mortgage discounts. In the last month, typical 5-year fixed rates have surged 45+ basis points and variable discounts (from prime rate) have decreased by 75+ bps. That’s due mainly to temporary “risk premiums.” In other words, lenders are charging borrowers more because...
8:06 p.m. Update Shell Game: The Bank of Canada has hacked 150 bps off its policy rate in just 23 days. Banks have matched the entire drop with 150 bps of prime rate cuts. BoC Governor Stephen Poloz said that was vital to “cushion” the COVID-19 “blow” for consumers. And, if you only considered banks’ prime rate reductions, they’d look...
3:12 p.m. Update Crude Reality: A semblance of optimism returned to markets today, but what really bears watching is oil. COVID-19 and other concerns aside, Canada’s economy is not out of the woods until oil prices run higher. There’s a rumour the Saudis and U.S. could ally on oil, which could be bullish. We’re going to get good news on...
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