Bank of Canada Governor Stephen Poloz dropped some notable rate-related nuggets in a speech Thursday. Below we ponder the implications of those comments for mortgagors. Here’s what Poloz said: ****** “Inflation expectations have become firmly anchored on our 2 percent target…My children will never pay anything like the kind of interest rates I have paid in my lifetime.” Translation for...
Markets are “well ahead of the data.” …said the world’s most powerful banker Friday. With his comments, Fed chief Jerome Powell reminded everyone that bond markets usually price in economic slowdowns 6-24 months ahead of time. The market’s fear going into today was that the Fed would snuff out economic growth with “auto-pilot” rate hikes, that the Fed wasn’t listening...
There’s a concerning new trend with variable rates. Discounts are shrinking. In the last few weeks, at least a dozen relevant lenders have shrunk their discounts from prime rate—by anywhere from 5 to 20 bps. This includes discretionary mortgage rates at some banks. How Convenient Wouldn’t you know it? Just as variable rates start attracting more consumer interest, lenders start...
For years now, policy-makers have been reining in government backing of the mortgage market, ostensibly to “reduce taxpayer risk.” Meanwhile, the riskiest mortgages in the prime owner-occupied market get the best mortgage rates. A “high-ratio” default insured borrower with only 5% down, for example, can fetch5-year fixed ratesat 3.29% or less. Yet, an uninsured borrower with four times the equity...
The deluge in yields continues. Canada’s benchmark 5-year yield just hit its lowest point since June. The last time we saw this kind ofcarnage was January 2015. Back then, the Bank of Canada made emergency rate cuts to stave off the oil crisis. Implied odds are slim that the bank will reverse course and lower its key rate near-term. But...
Something unusual has happened in the high-ratio mortgage world. Homebuyers with less than 20% equity are gravitating to floating-rates — more than ever in recent history. New data from the country’s top default insurer (CMHC) shows that almost a third of transactionally insured borrowers (31.3%) chose a variable- or adjustable-rate mortgage from July 1 to September 30. Jargon-Buster:“Transactionally insured” just...
The smart guys betting billions of dollars on interest rates are pulling back their wagers on 2019 rate hikes. (More on that, if you’re interested.) And if you believe those traders, the end of the current rate-tightening cycle may not be far off. The market is now pricing in just two more U.S. rate increases between now and the end...
So are a lot of other people. So far, all we’ve gotten is a dozen large or mid-sized lenders hiking 5-year fixed rates over the past week or so. Meanwhile, the 5-year swap yield (one of the best leading indicators for fixed mortgage rates) is back down to levels it saw six months ago. Back then (in May), the best...
There’s still way too much inefficiency in the mortgage research process. That is, if we’re to believe the latest CMHC data. Three out of four homebuyers used websites to gather mortgage-related information, says Canada’s housing agency. But, among those, only 20% of first-time buyers, 24% of repeat buyers and 23% of renewers used “interest rate comparison” websites. It’s bad enough...
The wait for good news on trade is over. The U.S. and Canada reached a last-minute deal on Sunday to replace the currentNorth American Free Trade Agreement (NAFTA). And we’re seeing the rate effects already. Canada’s 5-year bond yield, which steers fixed mortgage rates, has rallied to a fresh seven-and-a-half-year high. The new deal, called the United States-Mexico-Canada Agreement (USMCA),...
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