Monday Mortgage Update: July 30, 2012

Alyssa Furtado
by Alyssa Furtado July 30, 2012 / 1 Comment

Housing Prices Climb

The Municipal Property Assessment Corporation (MPAC) released their first-ever report on residential sale price trends last week, announcing that the price of homes in Ontario have increased 17 per cent between 2008 and 2012.

Housing hot spots Toronto and Ottawa saw a large increase in pricing, with a 23 per cent and 24 per cent rise in the average home price, respectivly. The largest increases were seen in Northern Ontario, thanks to high resource prices which created a boom in the mining industry. Timmins saw a 29 per cent jump in housing prices, and Sault Ste. Marie saw a 25 per cent increase.

“This report is good news for most Ontario homeowners. It shows the average sale price of residential properties in most communities has increased since 2008 and that the real estate market continues to be strong.” – Larry Hummel, Chief Assessor, MPAC

While an increase in property value typically means a positive economy and may benefit those who are already home-owners, it can also make it difficult for first-time home buyers to enter the market – especially in already-expensive cities like Toronto.

5-year fixed mortgage rates dropping

Just a month after the government introduced tighter mortgage rules, many lenders are dropping their 5-year fixed mortgage rates to historic lows. Currently, True North Mortgage’s best 5-year fixed rate is 2.89 per cent, and, if you look at our graph below outlining historic mortgage rates in Canada, you’ll see this is an all-time low.

“We expect 2.89 to become the norm by the end of next week.” – Dan Eisner, CEO, True North Mortgage

In turn, the spread between the current best 5-year fixed rate and 5-year variable rate has also narrowed, with True North Mortgage’s current lowest 5-year variable rate at 2.75 per cent (PRIME – 0.25). This is a mere 14-point difference, and is the lowest difference we’ve seen in recent years.

Mortgage Rate Recap

Last week, the last of the major Canadian banks dropped their 1-year, 2-year, and 3-year fixed interest rates to remain competitive. This week, there’s been a lot of action amongst some of Canada’s smaller institutions -many have similarly dropped their 3-year fixed rates; while others, including Invis and Dominion Lending, have increased their 2-year fixed rates and many of their longer-term fixed rates. Dominion increased their 2-year fixed by just 10 bps, from 2.49 per cent to 2.59 per cent, while Invis increased their rate by 20 bps from 2.49 per cent to 2.69 per cent.

Coast Capital mortgage rates

Rate Type

Previous Rate

Current Rate

Change in basis points

3-year fixed rate

3.19%

3.09%

Decrease of 10 bps

4-year fixed rate

3.25%

3.15%

Decrease of 14 bps

5-year fixed rate

3.29%

3.15%

Decrease of 20 bps

Dominion Lending mortgage rates

Rate Type

Previous Rate

Current Rate

Change in basis points

2-year fixed rate

3.49%

3.59%

Increase of 10 bps

3-year fixed rate

2.89%

3.69%

Decrease of 20 bps

7-year fixed rate

3.79%

3.99%

Increase of 20 bps

10-year fixed rate

3.89%

3.99%

Increase of 10 bps

ING Direct mortgage rates

Rate Type

Previous Rate

Current Rate

Change in basis points

5-year fixed rate

3.29%

3.09%

Decrease of 20 bps

7-year fixed rate

3.79%

3.69%

Decrease of 10 bps

Where are Canada’s Mortgage Rates this week?

 

A history of weekly 5-year fixed mortgage rates and 5-year variable mortgage rates

Canadian Mortgage Rates in 2012

Note:  This is simply a small sample size and does not represent the entire market. It does, however, offer some useful insight.


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