5-year Fixed Rates Break 2.00% Barrier

RECORD LOW red Rubber Stamp over a white background.Mortgage rates have bottomed.

That’s what some economists were proclaiming last year. The market then did what the market likes to do, confound and humble those who try to predict it.

Earlier today, intelliMortgage (a brokerage related to this website) became the first mortgage provider in Canada, according to RateSpy.com records, with a five-year fixed rate under 2.00%. It’s a rate that few would have expected at the turn of this decade. It’s even below most variable rates.

Five-fixeds have now dropped almost 20 points from their 1981 high, and the bottom may still be below us. Two percent is a key psychological threshold and potentially more impactful than even the 3.00% level, which was breached in 2011. In fact, it may be the last marquis barrier that five-years break, barring the unthinkable: sub-1% rates.

Buck-ninety-nine 5-year fixed rates could have real implications for real estate. With roughly half of Canadian borrowers choosing five-year fixed mortgages, according to Mortgage Professionals Canada, sub-2% rates could draw a new crop of buyers out of the closet and into the housing market. But that’ll take far more lenders at this level than just one. Moreover, this 1.99% rate is currently limited to insured mortgages over $250,000.

If you’re waiting for the big banks to drop below 2.00% on 5-year money, we wouldn’t hold our breath just yet. The majors are holding tight at 2.59% (advertised) and about 2.44% (discretionary). That’s a long way to 1.99%, especially for banks trying to protect their profits from a flat yield curve and shrinking net interest margins.


  • Young homeowner says:

    If only my mortgage renewal was a couple years sooner. Hoping these kinds of deals will still be around in 2018!!

  • Steve says:

    “Rate Notes

    No appraisal fees are required! Includes a FREE one-year home warranty (certain limitations and a $50 deductible apply). 120-day rate hold. Insured mortgages only. Otherwise please add 0.15% to the rate. Maximum mortgage amount: $950,000. $250,000 minimum mortgage. Otherwise please add 0.10% to the rate. Normal legal fees apply. This mortgage has no refinance restrictions. You can discharge or increase the mortgage at any time upon payment of the lender’s normal prepayment charge. There is no prepayment charge paid out of pocket for mortgage increases as it is blended with the new rate. Further, as a courtesy, the lender may discount this charge by up to 1/2% of the principal amount. That discount amount may vary. This is a “fair penalty” lender, meaning the prepayment charge is simply the greater of 3-month’s interest or the interest rate differential calculated at fair rates, not posted rates. The mortgage is fully portable so long as the sale of your old home and purchase of your new home close on the same day. All documents requested by intelliMortgage must be received withing 5 business days of approval. Otherwise a 0.05% rate surcharge applies. No rebates apply to this mortgage. Rate available only to clients who have not applied with intelliMortgage in the prior six months. Sorry, no exceptions. Some conditions may apply. Offer based on approved credit. Talk with us at intelliMortgage.com for full details!”

    That’s a lot to digest! Will need a RE lawyer to interpret into layman terms ;P

    • The Spy says:

      All mortgages come with conditions. Most folks don’t think about them too much because most providers have a ‘less is more’ disclosure policy. Our policy is, ‘more is more.’ But there’s only so much space to write.

      Online rate info is only the start of one’s mortgage research. No one gets a mortgage without speaking to the mortgage provider. So when in doubt, ask them for details.

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