A look at this week’s available mortgage rates on fixed and variable terms and HELOCsJIM WATSON/AFP/Getty Images
Borrowing costs reinflate
Once again, fixed mortgage rates under 5 per cent have done a disappearing act, at least for uninsured mortgages.
It happens, though. Rates are volatile after inflation peaks. Fixed rate mortgages below 5 per cent will almost certainly be back later this year – once the bond market starts pricing in a downturn more imminently.
The catalyst for this latest upward move has been a worrisome bout of inflationary economic data. That’s ushered bond yields higher, which pushes bank funding costs higher, which in turn drives fixed mortgage rates higher.
When your bank suggests you lock in your variable rate mortgage, it has an angle
As a result, a slew of fixed rates took the up-escalator this week. The cheapest nationally-available five-year fixed rate, for example, is now 25 basis points higher than it was last week. The lowest insured one-year fixed is now 105 basis points higher. (A basis point is 1/100th of a percentage point.)
On top of this, we’ve also seen a few major banks trim their floating-rate discounts in recent weeks. Par for the course is now prime rate minus 0.3 percentage points (6.4 per cent) for uninsured Big Bank variable rates. Although you’ll find cheaper options in the table below.
Insured variable rates, which benefit from low-cost securitization, are much lower. They start around prime minus 1.2 percentage points (5.5 per cent), or thereabouts.
If the market is right about two things – the economy buckling under rate pressure and the Bank of Canada having to drop rates next year – riding down an insured floating rate could save you some money. Not so much in the case of uninsured variables.
Rates are as of Feb. 23, 2023 from providers that 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 those 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.