Mortgage Rate News

5-year Yield Approaching January 2018 Lows

Canada’s 5-year bond yield sank to an 11-month low Wednesday as the Federal Reserve hiked U.S. rates again. But the Fed wasn’t as optimistic on the economy as some had hoped. In turn, it’s now projecting just two rate hikes in 2019, versus the prior estimate of three. On this side of the border, average core inflation dipped to 1.9%...

New Capital Requirements: The Rate Impact

It’s sort of counterintuitive that making banks safer often costs you more as a borrower, but that’s what may happen in this case. Canada’s banking regulator (OSFI) has raised the minimum capital that banks must maintain…again. And there’s a good chance banks could take it out on mortgage borrowers, eventually. Here’s What Happened Back in June, OSFI created the “Domestic...

Watch the Bouncing Consumer Debt Ball

Canada’s debt situation appears to be getting better…if you just look at mortgages. But something sinister lurks beneath the surface. And it’s made of plastic. Indebtedness has been outgrowing incomes in this country, despite stringent new mortgage restrictions. Canadians now owe $1.78 in credit market debt for every dollar of household disposable income, just under the record high. And we keep...

Mortgage Growth Ain’t What it Used To Be

And that’s as the government intended. Albeit, the deceleration may be less pronounced than some might expect, given all the recent headlines about this year’s real estate slowdown and mortgage rule tightening. Here are fresh new mortgage stats from CMHC and Equifax (as of second quarter of 2018): Number of active mortgages: 5.98 million This number essentially stayed the same...

How the Lowest Rates Cause Banks Headaches

For years now, policy-makers have been reining in government backing of the mortgage market, ostensibly to “reduce taxpayer risk.” Meanwhile, the riskiest mortgages in the prime owner-occupied market get the best mortgage rates. A “high-ratio” default insured borrower with only 5% down, for example, can fetch 5-year fixed rates at 3.29% or less. Yet, an uninsured borrower with four times the equity...

Bond Yield Massacre

The deluge in yields continues. Canada’s benchmark 5-year yield just hit its lowest point since June. The last time we saw this kind of carnage was January 2015. Back then, the Bank of Canada made emergency rate cuts to stave off the oil crisis. Implied odds are slim that the bank will reverse course and lower its key rate near-term. But...

Bank of Canada: Steady as She Goes?

Fears of a slowing economy take rate hikes off the table, and such concerns definitely took a hike off the table today. Canada’s main rate setter, the Bank of Canada, did what most predicted and left rates as-is at this morning’s rate meeting. But the outlook did change. Here’s more on the BoC’s latest decision, and what it means to...

The Odd Spike in Insured Variable-Rate Mortgages

Something unusual has happened in the high-ratio mortgage world. Homebuyers with less than 20% equity are gravitating to floating-rates — more than ever in recent history. New data from the country’s top default insurer (CMHC) shows that almost a third of transactionally insured borrowers (31.3%) chose a variable- or adjustable-rate mortgage from July 1 to September 30. Jargon-Buster: “Transactionally insured” just...

Relaxed Mortgage Rules in 2019?

Those who think the government went overboard on mortgage tightening may have a glimmer of hope. In a presentation Wednesday, Stuart Levings, head of Canada’s largest private default insurer, Genworth Canada, said the company will be urging policy-makers to improve housing access, particularly for younger homeowners. “The only reason we think there’s an opportunity is because it’s an election year,”...

The Market Tempers its Rate Hike Bets

The smart guys betting billions of dollars on interest rates are pulling back their wagers on 2019 rate hikes. (More on that, if you’re interested.) And if you believe those traders, the end of the current rate-tightening cycle may not be far off. The market is now pricing in just two more U.S. rate increases between now and the end...