A look at this week’s available mortgage rates on fixed and variable terms and HELOCsRobert F. Bukaty/The Associated Press
Fixed rates in a downtrend
Variable rates are stuck at 22-year highs, thanks to the multidecade high in the prime rate. And the Bank of Canada is signalling that it will leave prime as is for months, if not quarters.
But at least we’re making progress with fixed rates. Fixed mortgage rates move faster, and more in line with market expectations of future rates. Bond yields embody those expectations and they’ve been falling for three months.
McLister: Lock in your mortgage if you can’t afford to gamble, but cuts may be coming
This week we saw a 10- to 20-bps improvement in four-year and 10-year fixed rates. How marvellous.
Unfortunately, those aren’t the mortgage rates people want.
The hot commodities today are one-year and two-year fixed rates. That’s what people want most given rate-cut expectations and the fact variable rates are much higher.
Two-year fixed rates will come down quicker, simply because the likelihood of rate cuts is higher within two years than one year.
If you want a short-term rate and are hoping for a drop, watch Canada’s two-year bond yield. If you see it start to accelerate to the downside—which will eventually happen—you can expect lower short-term fixed rates ahead.
Robert McLister is an interest rate analyst, mortgage strategist and editor of MortgageLogic.news. You can follow him on Twitter at @RobMcLister.
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