Banks could easily trim fixed rates if they wanted to. But, for now, they’d rather pad their bottom lines ahead of a potential storm with mortgage losses.David Zalubowski/The Associated Press
Mortgage funding costs drop but banks have sticky fingers
It’s another sweet-and-sour report on mortgages this week.
The good news: Selected mortgage funding costs have sunk 92 basis points in less than two months, as measured by four-year swap rate. What’s a four-year swap rate? It’s a handy rough proxy for lenders’ fixed-rate funding costs. (A basis point is 1/100th of a percentage point.)
The bad news: Banks are hoarding all the savings for themselves, like squirrels with winter nuts. That’s particularly true when it comes to uninsured mortgages.
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That means lender revenue margins are the widest they’ve been in years. So yes, banks could easily trim fixed rates if they wanted to. But, for now, they’d rather pad their bottom lines ahead of a potential storm with mortgage losses.
That said, lenders far and wide are dying for mortgage volume. They’re hungrier for your business than a pack of wolves at a steakhouse. So this is when you have to negotiate like a pro. Pit multiple mortgage providers against each other and watch the sparks fly. They have the margin to play with and one will be willing to make less money than the others.
Just be mindful of mortgage features and service differences. No-frills mortgage rates often come with less service and advice, or contract limitations that bite you after closing when you try to port or refinance your mortgage.
As for rate changes, the only nationally-available leading rate change this week was to HSBC’s uninsured five-year variable, which rose 10 basis points to prime minus 0.7 per cent.
Rates were sourced from the MortgageLogic.news Canadian Mortgage Rate Survey on Nov. 30, 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.