1.99% Mortgage Rates are Back. This Time With DUCA

DUCA just launched Canada's lowest mortgage rate, a 1.99% two-year fixedSub-2% rates are here again. This time from Toronto-based DUCA Financial Services Credit Union — for default-insured 2-year fixed mortgages.

This brand new offer is easily the lowest 2-year fixed rate out there. In fact, it’s the lowest mortgage rate in Canada period, and 57 basis points below the country’s next best offer.

“This product is designed to help out first-time homebuyers get into the market,” said Arthur Krzycki, VP, Marketing at DUCA. “We recognize that this group has had a very tough time of late and so, we’re hoping to give them a hand by offering a mortgage rate that will make a significant difference to the math of buying a home.”

This rate sale—available in Ontario only—follows a 1.98% two-year fixed promotion from DUCA’s rival, Meridian Credit Union, earlier this spring. Apparently rates under 2% make for good marketing. Who knew?

The Details

Since DUCA’s offer applies to insured mortgages only (purchases), that means it’s inapplicable for refinances, amortizations over 25 years, $1+ million properties and non-owner-occupied rental properties.

And, of course, you have to meet the federal insured stress test, i.e., prove you can afford a payment at 5.34%.

“There are no unique restrictions compared to DUCA’s regular high-ratio insured mortgages,” Krzycki says.

How Good a Deal is It?

It’s pretty darned good. With the financial markets now pricing in a slowing economy (note the inverted yield curve) and a Bank of Canada rate cut by year-end, rate risk at renewal in 2021 is arguably modest. But that said, no one should consider this term unless they’re financially secure and psychologically prepared, in the off chance rates do pop in two years.

If you’re a die-hard rate bear predicting cuts, do note that the BoC would have to chop its overnight rate three times in the next year or so for you to be better off with the lowest possible variable rate. That could happen, but do you really want to chance it with a 1.99% bird in the hand?

And if you’re comparing to a variable, keep in mind that banks aren’t guaranteed to drop prime rate point-for-point with the Bank of Canada. They’ve already twice proven their willingness to pocket some of the BoC’s rate cuts.

More DUCA mortgage rates


  • Melissa says:

    Just called them. Advised only new high-ratio/insured purchases eligible for this rate. Insured renewals not eligible.

  • Mike says:

    Compared to say a 5 yr fixed today at 2.84, how much would fixed rates need to rise by 2021 for it to be unfavourable? Years 2021-2023 at 3.5% to break even?

    • The Spy says:

      Hey Mike, You’re very close, yes. I get about 3.51%.

      (That factors in standard interest cost alone, assuming equal payments. There are other considerations of course.)

  • Mike says:

    Thank you for the reply! Is there a way based on current bond yields to calculate what % probability the market is pricing of interest rates reaching 3.5% by 2021? For those considering this offer vs a 5 year fixed that would help quantify the risk, understanding that the market changes quickly as we’ve seen this year.

    • The Spy says:

      Hi Mike, It’s relatively more straightforward to calculate “forward rates” from existing bond yields than it is to calculate probabilities of a specific rate in the future. The math on the latter is complex (made easier if you have a financial data terminal like Bloomberg or Eikon). And the data is unreliable — especially the further out you try to predict. With the curve inverted, suffice it to say that implied probabilities of hikes in the next two years are small (for what that’s worth).

Leave a Reply

Your email address will not be published. Required fields are marked *