For the second week in a row, 5-year Government of Canada (GoC) bond yields fell, starting last Monday at 1.65% and finishing at 1.57% for an eight basis point drop. GoC bond yields influence fixed mortgage rates, but last week, lender 5-year fixed rates moved in the opposite direction. This was due to the end of the second mortgage pricing war spurred on by Canada’s Big Five banks, which many experts believed to be unsustainable. The big banks were offering 2.99% fixed rates for 4 and 5-year terms, but the ultra-low rates lasted only a few weeks before being pulled. Currently, the best 4-year fixed rate and 5-year fixed rate offered by a bank now belongs to PC Financial, which offers them at 3.20% and 3.44% respectively.
Variable interest rates continue to experience little price movements. The lowest 5-year variable rate did move up 5 basis points to start this week and is now available at 2.80% on Ratehub.ca. The spread between the 5-year fixed and 5-year variable rate almost doubled once the mortgage wars ended, from a spread of 24 basis points to 44 basis points. This merits some consideration for variable rates, although fixed rates will likely remain popular so long as they continue to hover at historic lows.
Where are Canada Mortgage Rates this week?
A 5-year history of weekly 5-year fixed mortgage rates and 5-year variable mortgage rates
Canadian Mortgage Rates 2012
Scotiabank, which advertised one of the lowest 3-year fixed rates, raised their rate from 2.79% to 3.99%. The best 3-year fixed rate currently available on Ratehub.ca is still 2.79%.
Note: This is simply a small sample size and does not represent the entire market. It does, however, offer some useful insight.