It has been predicted from the start of the year that there will be a cut coming to prime rate at some point this summer.  The Bank of Canada had another scheduled interest rate this morning and announced no changes to their overnight rate, which in turn affects prime rate.  So it looks like we’ll need to wait a little longer.

In most cases, the Bank of Canada rate announcements refer to prime rate only, which affects variable rate mortgages and HELOCs (Home Equity Line of Credit). They generally do not have a direct impact on fixed mortgage rates, however this is not always the case.

Fixed mortgage rates are determined by bond yields. When the yields trend downward, this puts downward pressure on fixed rates. When they trend upward, the opposite occurs.

Today, bond yields are down 2.11% at time of publishing this article. Prime rate is status quo yet the yields drop. So does this mean that fixed rates will drop?

Definitely not!

The bond yields have been trending upward for the last few weeks.  On Friday, they skyrocketed up almost 8%.  They were then up again another 2% on Monday. This now puts upward pressure on fixed mortgage rates.  A few lenders have already increased rates and likely more will follow.

There are currently 5 year fixed rates as low as 2.49% for high ratio (CMHC insured) mortgages closing within 30 days.  For conventional mortgages with 35% or greater down payment / equity, 5 year fixed rates are as low as 2.54%* in many cases.

You can follow the bond yields yourself here. 
You can read about the announcement here. 

Fixed rates now range from 2.54% – 2.89%*, depending on your situation.  Variable rates range from prime -1.25% to prime -0.70% (2.70% – 3.25%)*.  In many cases, variable rates are even higher than fixed rates. For this reason, few are choosing variable rates these days.

The next scheduled interest rate announcement from the Bank of Canada will be on September 4th, 2019.

*Rates vary based on down payment / equity percentage, property value, etc. Please get in touch with me to find out the lowest rate available for your situation.

 

Paul is the author of the Amazon best selling book, “Beat the Bank – How to win the mortgage game in Canada”, available on Amazon.ca and in bookstores. You can also watch him as the exclusive mortgage broker on season two of the popular television show Top Million Dollar Agent (Global, Slice, and Rogers TV).