Categories for Mortgage Rate Trends

Fixed Rate Alert

The entire mortgage market was waiting, and now, after 10 months, it finally happened. Canada’s 5-year bond yield (which influences fixed mortgage rates) broke through major resistance, resistance that goes all the way back to April of last year. It’s a signal that better economic times lie ahead. A sign that inflation should no longer be just an afterthought. A...

Watch Those Swaps

It’s not getting any cheaper for banks to fund a fixed-rate mortgage. In fact, Canada’s 5-year swap rate, a common measure of 5-year funding costs at the big banks, is running at a 10-month high. Yet, still we’re seeing lenders trim 5-year fixed rates as the cut-throat spring market approaches. RBC chopped its 5-year fixed by 18 bps last week....

A Yield Breakout is Forthcoming…Wait for It

5-year fixed mortgage rates tend to shadow 5-year government yields. And for most of nine months, the 5-year yield has been locked in a 21-basis-point range, a range so tight it was practically inconceivable prior to COVID. And, while no one has ever seen a range like this in our lifetimes, ultimately the 5-year yield will break out. When that...

Lousy Short-term Mortgage Rates

Despite record-low short-term interest rates, most banks are offering junk 1-, 2- and 3-year rates on uninsured mortgages through the broker channel. We’re seeing 5-year variable pricing as low as 1.45% or less at major banks. Yet, on a one-year fixed, for example, they quote mortgage brokers over 2.40%. That’s well above the discretionary rates bank customers are reporting to...

Variable-rate Mortgages Should Get Cheaper

Variable rates on new mortgages could get a little cheaper this quarter, for one of four reasons, or maybe all four: Bankers’ acceptance (BA) rates — a general proxy for variable-rate funding costs — are at an all-time low. That’s boosted the spread between prime rate and BAs to almost a 12-year high. Think of that spread as a rough...

Wednesday’s Historic Events Nudge Rates Higher

The Mortgage Report: Jan. 6, 2021 U.S. 5-year yields leaped to a 7-week high on Wednesday as Democrats took control of all three houses of government, thanks to their historic win in Georgia. Canada’s 5-year yield rose in sympathy by a less notable 2 bps, but economists nonetheless expect more of an incline in rates this year. The reason: Democrats...

New Year, New Optimism, New Rate Risk

The Mortgage Report: Jan. 4, 2021 2020 was a year that took pleasure in humiliating forecasters. From the remarkable bounce in housing, to the resilience of mortgage volumes, to the devastation in big-city rental markets, to the homeowner exodus from urban cores to the lows of contract mortgage rates, to the persistence of high qualifying rates — 2020 made the...

One More Dip in Rates?

“Vaccines have come too late to avoid a bleak winter,” said Capital Economics in a report last week. The market agrees. Canada’s two-year bond yield, often used to forecast Bank of Canada rate policy, hit a record low on Thursday. That coincides with recent BoC comments that it could cut the overnight rate by less than the standard 25 basis...

You Can Still Count on Rock-Bottom Rates, Says BoC

—The Mortgage Report: Nov. 27— If you’re out there mortgage shopping, BoC chief Tiff Macklem had a message for you Thursday: “We want to be very clear, Canadians can be confident that borrowing costs are going to remain very low for a long time.” It’s a mantra he’s repeated for months. Among the reasons: “…The economy still has more than...

How Far We’ve Come

—The Mortgage Report: Nov. 17— Remember that rate: 8 3/4%? Your average first-time buyer wouldn’t, as he/she would’ve been just seven years old at the time (1991). 8.75% was a tremendous 1-year fixed rate back then. But man, did it take a bite out of people’s budgets. Consider that on a standard $100,000 mortgage, you would’ve paid: $811 a month,...