Is This a Joke?: “The CMHC defines housing as affordable when ‘it costs less than 30% of a household’s before-tax income,’ which includes rent or mortgage (principal and interest) payments, property taxes and other home bills,” reports the Financial Post. The punchline is, you have to move to a remote fishing village in Newfoundland to find that kind of affordability. Then again, home-based jobs are catching on so that might just work for people. Just be sure your rural one-room seaside cottage has high-speed internet.
CIBC’s New Insured Specials: It used to be mainly mortgage finance companies and other small lenders that advertised cheaper rates for default-insured mortgages. Now, most of the big banks are doing it. Canada’s imperial bank launched two new special rates on Wednesday, both for high-ratio applicants only:
5yr fixed: 2.22%
Canada’s lowest widely advertised 5-year fixed from a Big-6 bank
Scotia’s eHOME is down to 1.93% last we looked, but it doesn’t openly advertise its rates
5yr variable: 2.13% (prime – 0.32%)
TD Cuts: The green machine dropped a bunch of posted fixed rates today:
6mo convertible: 3.14% to 3.09%
1yr: 3.24% to 3.14%
2yr: 3.39% to 3.19%
3yr: 3.79% to 3.49%
4yr: 3.94% to 3.74%
5yr: 4.84% to 4.59%
This is the most interesting. If a few of the other Big 6 banks matched TD’s 5-year posted rate, it could slash the minimum stress-test rate (currently 4.94%) by 35 bps and boost mortgage shoppers’ buying power by up to 3.4%.
6yr: 5.64% to 5.24%
7yr: 5.80% to 5.35%
10yr: 6.10% to 5.60%
COVID Update: Rates north of the border usually follow rates south of the border. Hence, U.S. economics matter. Hence, U.S. viral metrics matter. Oppenheimer reports positive trends on that front—namely that new daily positives are declining, hospitalization rates are falling, the mortality rate spike was disproportionately small and short-lived, and U.S. hospital occupancy (65.9%) is below its 10-year average. Their takeaway: another nationwide shutdown is unlikely, which would put us on the path to an interest rate recovery sooner. And by “soon,” we mean well into the future.
Next Stop, AA?: The U.S. may be on track to lose another AAA credit rating. If it does, global investors could eventually price it in (i.e., build rate premiums into U.S. Treasury yields), something Canadian borrowers would feel—to at least some degree. The Story…