Mortgage Rate News

Rates Hit by SARS 2.0 (?), the Dud First-Time Buyers Program & More

Today’s big mortgage headlines… Coronavirus Rate Sale Bond yields are getting killed as investors pile into bonds for safety. Traders fear a next coming of SARS (which authorities call the Wuhan coronavirus) could be deflationary. That’s weighing on rates as the inflation outlook is a key rate driver. Fear of the unknown has shaved 1/4 point off Canada’s 5-year bond...

The Door is Open to Rate Cuts, Says BoC

The popularity of fixed mortgage rates in 2019 was unmistakable. But the Bank of Canada may have moved the needle for variable rates with its comments Wednesday. Below are the week’s top 10 statements from the BoC, all of which will be of interest to any serious rate watcher. The below quotes come from Bank of Canada Governor Stephen Poloz...

How to View the Bank of Canada’s More Sombre Tone

Canada’s rate-setter left its key rate untouched today while striking a less-than-cheery chord on the country’s outlook. Here’s a quick take on this morning’s Bank of Canada rate decision: Rate Announcement: No change Overnight rate: Remains at 1.75% Prime Rate: Remains at 3.95% (see Prime Rate) Market Rate Forecast: One rate cut in 2020 BoC’s Headline Quote: “…Governing Council will be watching closely to...

Trading Relationships for Rate Savings

How much would you have to save to deal with a mortgage lender that had no in-person or telephone advisors, just ultra-low rates, live chat support and a reliable, efficient user experience? If you’re like 16% of mortgage shoppers, you wouldn’t deal with that kind of lender at all. If you’re like 18% of mortgage shoppers, you’d happily use an...

Most People Don’t Know What Amortization Means

It’s a fact; little better than 1 in 4 Canadians have any idea what amortization means, according to a recently-released Ipsos survey. Surprisingly, “…Less than 1% of respondents gave a strictly correct response by saying only that it means “the time to pay the mortgage in full,'” Ipsos wrote in its report. Just as eye-opening, 14% of people claimed to have...

Ultra-low Rates Will Persist: RBC

The 2020s won’t be the decade to lock into a long-term fixed mortgage, not if you believe RBC Economics. It’s projecting just 1.7% annual economic growth for the next 10 years, give or take. That’s roughly a full point less than before the Great Recession. At 1.7% GDP, there’s generally very little reason for rate hikes. Quite the opposite, RBC...

Interest-Only Flex Mortgages at Near Record-Low Premiums

For some people, minimizing their monthly payments outweighs minimizing interest expense. These people happily pay higher rates to improve their cash-flow. That’s precisely why interest-only (I/O) mortgages exist. And since the beginning of time, they’ve always sold for a premium above conventional mortgages. Today, however, that premium is near a record low. Whereas Canada’s most aggressively priced interest-only mortgage (the...

A “Historic Nightmare,” But Not for Interest Rates + Mortgage Nuggets

Iran is still miffed about the U.S. exterminating its #1 general. It’s reportedly contemplating 13 potential strategies for inflicting a “historic nightmare” on the American infidels. Apart from ensuring its own devastation, such a move would likely drive down Canadian bond yields. Five-year yields often drop during wartime as investors rush for safety in government-guaranteed securities. In the 1990 Gulf War,...

2020 Rate Wildcard: War

Here’s reason #5,369 why we don’t like to predict interest rates: war. Canada woke up this morning to the leader of Iran’s Revolutionary Guards’ Quds force being incinerated by a U.S. bomb. Iran’s Supreme Leader promised “severe retaliation” — whatever that means — and just like that, bond yields plunged. It was completely unpredictable. When global risk escalates, traders instinctively...

Big Banks Remain Under Pressure on Standalone HELOC Rates

motusbank and Tangerine have been putting the screws to HELOC competitors for months now. Their respective 3.75% and 3.85% HELOC rates have undercut almost every lender in Canada since last spring. That’s far longer than other lenders ever expected (or hoped). The more that consumers learn about these rates, the more it becomes an issue for the major banks. Reason being, HELOCs are usually...