The leading nationally advertised uninsured five-year fixed rate plunged 20 basis points to 5.59 per cent.Matt Rourke/The Associated Press
Fixed Rates in Freefall
Fixed mortgage rates are cannonballing off the high diving board this week. The leading nationally advertised uninsured five-year fixed rate plunged 20 basis points to 5.59 per cent. (A basis point is 1/100th of a percentage point.)
But regional providers have even juicer discounts. At Butler mortgage, for example, you can get an uninsured five-year for 5.19 per cent in Alberta, B.C. and Ontario. For those with $800,000 loans or above, they’ve got 4.99 per cent on offer.
These new and improved fixed-rate discounts have considerably widened the gap between five-year fixed and variable rates. That should broaden the appeal of fixed rates, for now. Based on how mortgage qualifying works, it also boosts purchasing power by over 4 per cent for five-year borrowers with at least 20 per cent down.
Now if we consider the bond market’s forward rate outlook, as tracked by Candeal DNA, it suggests rates could drop 250 basis points in the next few years. If that proves true, today’s lowest uninsured variable at 6.55 per cent will save you more. But if we get even one or two fewer rate cuts than expected, the edge (on paper) shifts to that 4.99 or 5.24 per cent five-year fixed.
If you need an insured mortgage, True North Mortgage has a 3.99 per cent six-month fixed. In six months, it lets you renew into an adjustable-rate mortgage (ARM), presently around prime minus 1 per cent (6.2 per cent). It’s a decent play to take advantage of falling rates. But note, a 1-per-cent fee applies if you leave True North at that first renewal.
Alternatively, if you can find an insured ARM elsewhere at prime minus 1.25 per cent or better, that’s mathematically just as good, roughly speaking.
Rates were sourced from the MortgageLogic.news Canadian Mortgage Rate Survey on Dec. 21, 2023. We include only providers who advertise rates online and lend in at least nine provinces. Insured rates apply to those buying with less than a 20 per cent down payment or switching a pre-existing insured mortgage to a new lender. Uninsured rates apply to refinances and purchases over $1-million and may include applicable lender rate premiums. For providers whose rates vary by province, their highest rate is shown.
Robert McLister is an interest rate analyst, mortgage strategist and editor of MortgageLogic.news. You can follow him on Twitter at @RobMcLister.