Fixed Mortgage Rates Dropping Further

It was no surprise that last week’s rate announcement from the Bank of Canada resulted in maintaining the status quo….. for the tenth straight time. 

Much like shopping for a mortgage, there is a lot more to these announcements than just rate.  They also include the Monetary Policy Report, which provides the BOC’s economic outlook, both global and domestic. In the report, they stated that “there remains a high degree of uncertainty , and that multiple areas of the economy have weakened, such as job creation, business investment, and overall consumer confidence.  As a result, bond yields started plummeting, which placed immediate downward pressure on fixed mortgage rates.

The Bank of Canada will be carefully watching to see if the weakness continues.  Regardless, it is becoming more uncertain that a cut to prime rate will come to fruition anytime soon.  The BOC is waiting for a clear trend to become apparent, at which point they may consider moving forward with a rate cut. This may not happen until the summer, or even further into the year… if at all.

Bond yields have now dropped to their lowest level since October 10^th, at which time 5 year fixed mortgage rates ranged from 2.54% – 2.79%.  Some lenders have already dropped rates, which are now back down to as low as 2.49%*.  For purchases of property valued at over $1 million, and for mortgages amortized over 30 years, the rate still hovers around 2.94%. I expect that we’ll see a drop to this rate soon as well. 

*The 5 year fixed at 2.49% is for insured purchases only (less than 20% down payment).  For purchases under $1 milllion with 25% or greater down payment, the lowest rate is 2.59%.  With 20-24.99% down payment, the lowest rate is 2.75%.  Maximum 25 year amortization.