Tag Archives: Mortgage Rates

Mortgage Update by Paula Siemens | Invis

An overall Global Economic slowdown caused by tariffs, and overall political uncertainty has caused the bond market yields to fall. We may not see a recession in 2020 as originally thought, but there is tremendous volatility in play at present.

In July, the jobless rate rose causing the Bank of Canada to come up with a plan to buy Canadian bonds back to create a stabilization to our bond yields. Falling yields are good for fixed mortgage rates. We have recently seen rate sales increase for purchases of homes under $1M and for mortgages coming up for renewal through lenders’ transfer programs. Refinance and rental rates have seen a modest reduction as well.

We are currently in an inverted market where variable rates are higher than the 5 yr fixed rates. If you are in a variable rate mortgage you may wish to explore your rate to convert into a new 5 yr fixed rate, you may end up saving money by locking in. However, it is very important to consider that locking your rate in also exposes you to a higher exit penalty. If you plan on selling to buy a bigger place, or downsizing you may be better off staying in a variable mortgage as your penalty will be be capped at a 3 months interest penalty for a traditional variable mortgage product.

Mortgage Update

by Paula Siemens | INVIS The Siemens Group

The Bank of Canada announced that they will be holding the overnight rate as is, citing a slower than expected 2019 economic outlook; which will keep the prime rate as is. Posted fixed rates should also remain stable. However, lenders’ cost to underwrite a mortgage have increased substantially over the past few years due to legislative changes. It now costs on average $1500-2000 to underwrite a mortgage application due to increased scrutiny and reporting required. The lenders feel that the current climate is a race to the bottom, leaving very little profit margin for your average mortgage. At some point lenders will feel that they can no longer offer the same rate sales, meaning we could see some effective mortgage rates rise slightly while the Bank of Canada Rate and Bank Posted rates remains unchanged.

The Bank of Canada will likely try to increase the overnight rate in 2020.