The Daily Mortgage Report – May 4 Variable Advantage Fades: The lowest widely available 5-year fixed rates are now just 20 basis points more than the lowest variable rates. That differential has shrunk considerably in the last month or so, causing some would-be variable takers to give up and go fixed. RateSpy simulations confirm it would now only take two...
Tiff Gets the Nod: Canada’s most important banker will soon be Tiff Macklem. Effective June 3, he’s taking over for Bank of Canada Governor Stephen Poloz. We’ll hear Macklem at BoC rate announcements for the next seven years and already he’s moving markets. Following his appointment Friday, he spoke of: downside risks to the economic recovery the fact that negative...
9:09 p.m. Update Southbound Fixed Rates: Lender after lender has announced fixed-rate drops this week. And with Canada’s 5-year yield closing at a record low today, it’s no coincidence. It was the first time ever that our 5-year bond closed below 0.40%. Prerequisite for Recovery: “…We need monetary stimulus to reach the ultimate borrower,” said BoC chief Stephan Poloz today....
TD Canada Trust rate cuts: Special fixed rates drop from: 3yr: 2.99% to 2.89% 5yr (high ratio): 2.99% to 2.79% Posted rates drop from: 1yr fixed: 3.59% to 3.44% 2yr fixed: 3.74% to 3.54% 5yr variable: 2.65% to 2.35% (P – 0.25%) Every time a bank cuts 1- and 2-year posted rates, it raises the chances of customers paying bigger...
Tough Sledding: The mortgage industry will remain under pressure “over the near-term as employment trends weaken, credit loss provisioning moves higher, and housing / mortgage activity pulls back materially,” TD says. If government subsidies disappear in 2021, the bank projects 50% higher mortgage defaults industry-wide, peaking in first quarter 2021. But the overall arrears level will stay below the historical...
Today’s Rate Menu: After a three-week hiatus, variable mortgage rates are back down to prime – 0.50% (a 1.95% effective rate, including cash back) in some provinces—but only if you need a default-insured mortgage. The lowest widely advertised uninsured rates remain HSBC’s 2-year fixed at 2.34% and the fully open Tangerine HELOC at 2.35%. Sales Should Surge Post-Reopening: Home purchases...
RBC Cuts Again: The nation’s biggest mortgage lender dropped six “Special Rates” today: 1yr: 3.14% to 3.04% 2yr: 2.79% to 2.69% 3yr: 2.99% to 2.89% 4yr: 3.04% to 2.94% 5yr: 3.24% to 3.09% Variable: Prime + 0.25% to Prime +0.00% Quick take: Despite the fact that prime + 0% is nothing to write home about, any improvement in variable-rate pricing...
Record Broken: Canada’s 5-year bond yield moves fixed mortgage rates and it closed at another all-time low today. That coincides with a roughly three-week low in risk/liquidity premiums. Together, these two factors are driving fixed mortgage rates lower, with numerous lenders trimming rates 5-15 bps this week. More Hope: “With a vaccine more than likely out of reach for this...
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....
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