Coronavirus Mortgage Update – March 31

11:23 a.m. Update

canadian mortgage rate movements
  • Notable Moves: The day’s top rate changes:
    • BMO lowers its posted variable rates by 50 bps in line with the drop in prime:
      • 3yr open: 4.65% to 4.15%
      • 5yr closed: 3.45% to 2.95%
    • HSBC improved these rates specials:
      • 5yr fixed (refis): 2.79% to 2.69%
      • 5yr fixed (high ratio): 2.49% to 2.39%
      • 5yr variable (refis): 3.15% to 2.65%
      • It also cut its posted HELOC rate from 3.45% to 2.95%
    • motusbank hiked all of its fixed rates from 2.69% to 2.79%.
  • The Floor Has Dropped Out: If Capital Economics is right, consensus estimates of Q2 GDP are a “tad” shy. The firm estimates a 35% plunge in Canadian GDP next quarter.
  • Survey: “One in five Canadians are at risk of missing a major payment in the next four weeks” (Source: Bloomberg)
  • HELOCs Get Easier: To qualify for, that is. Prior to yesterday’s drop in prime, bank HELOCs were priced at prime + 0.50% on average (3.45%). That required one to prove they can afford a payment based on 5.45%, due to the federal “stress test.” The reduction in prime drops the qualifying rate on most competitive HELOCs to 5.04%, making it easier to qualify.
  • GIC Rates Retreat: One-year GIC rates at smaller lenders have done a massive 180. After spiking 65-75+ bps in a week or so, they’ve plunged back to the 1.70% to 1.85% range, according to market analyst Ben Rabidoux. That’s bad news for GIC investors, but good news for non-prime borrowers, to the extent this reduces lender funding costs and upward pressure on mortgage rates. Incidentally, this is highly unusual behaviour. It’s like the government is watching for any signs of funding stress and addressing with lenders right away.


  • Jack Hall says:

    Hi Spy! Thanks for so much great info! I am just about to renew my mortgage and just hope this is not too much information for making a decision 🙂
    Question: my current mortgage is a variable on Prime -0.6%. So by now this is a mouth-watering 1.85%. Unfortunately timing is against me, this won’t last long as it matures around end of June (less than 3 months from now).
    My current lender is pushing me to renew early but the best they are offering is Prime (2.45 for variable) or 2.99 5yr fixed. No wonder they want me to renew early. At the same time if I switch to somewhere else I can get maybe 2.30 to 2.45 fixed.
    But I don’t want to jump the gun and regret later. Does it make sense to stay put, reap the 1.85 benefit while it lasts and then renew on variable? I know there’s a risk the offer for variable rate might get worse in 2 or 3 months, but jumping ship (lenders) for very little difference in the rate seems like a lot of risk too.

    • The Spy says:

      Hi Jack, The right move depends on so many things, including your mortgage balance, financial status, risk tolerance, etc. But I can say one thing: I (personally) would never consider a variable at prime – 0% in this environment. Nor would I lock into a 5-year fixed at almost 3%. There are lots of other term options out there for well-qualified borrowers. One option for folks who are within 90 days of maturity is to lock in a decent rate now and then reassess rates 30 days from renewal.

  • David says:


    I have a general question: I am a first time home buyer and wanted to know your opinion given the state of the world….. is it advisable to go variable or fixed right now? I keep going back and forth and would love some input

  • Jaya says:

    Your daily update is informative. Keep it up.

    My comment is about HELOC.
    I filled up online application form at Tangerine for 2.35% first position HELOC. I have not submitted my application because I think I can negotiate for a lower rate because of my good financial stats below;

    Property market value – $480K
    Mortgage – $120K (Scotiabank)
    Credit score – 803 as of December 19, 2020
    Liability – 3K low cost borrowing
    2-year average annual income – 36K (passive, self employed)

    So, submit now or meet and negotiate?

    Also could I use HELOC to pay off my mortgage then use my monthly mortgage payment to pay HELOC?

    • The Spy says:

      Hi Jaya, Not sure how negotiable Tangerine will be given (A) they lead the market, (B) that rate is so low it doesn’t make sense to begin with and (C) 36k is not much income relative to your obligations. You better make sure you can qualify first.

      Qualified borrowers can generally use a HELOC to pay out their first mortgage. But Tangerine is owned by Scotiabank so consult with them on what’s possible in your case.

  • Allan says:


    Do think once things settle down fixed and variable rate will become more attractive in the 3 or 4 quarter of 2020? Or do you see them staying the same or rising from current levels?

    Thank you

    • The Spy says:

      Hi Allen, We know that in time, risk premiums will decrease. Discounts will then start reverting towards normal. That could take 3, 6, 9, 12 or 18+ months. It’s impossible to say and hinges on factors like the depth and duration of unemployment, credit risk (corporate and consumer), default rates, home prices, etc. If things theoretically played out roughly like 2008-09 (which may be a stretch), we could see discount improvement before year-end.

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