Monday Mortgage Update: November 14, 2011

Alyssa Furtado
by Alyssa Furtado November 14, 2011 / No Comments

Variable rate mortgage are starting to climb again as they made a big jump from last week (up 22 basis points). Discounts on 5-year variable mortgages have been steadily climbing since the end of the summer. Each week we are witness to the shrinking spread between 5-year fixed and 5-year variable rates. In terms of the Bank of Canada’s key interest rate, most economists are still predicting rate hikes next year somewhere in Q3, although a few are now starting to sway in the opposite direction. A small group of economists are actually forecasting rate cuts in 2012. This is good news for variable rates which most lenders have listed at 3.00% (Prime +0.00%).

In terms of 5-year fixed mortgage rates, lenders have kept rates steady over the past few weeks, even when Government of Canada bond yields finish lower for the week. This is in part to their “wait and see” approach regarding the financial storm happening across the pond, especially the situations in Italy and Greece.

In any scenario, whether economists predict rate small hikes or small rate cuts in 2012, this much is clear – mortgage rates should continue to remain low over the next year.

Current Mortgage Rates

Mortgage Rates Canada

Discounted weekly 5-year fixed mortgage rates and 5-year variable mortgage rates from January 2011 to the present.

Mortgage Rates Canada

Discounted weekly 5-year fixed mortgage rates and 5-year variable mortgage rates over the past five years.

Mortgage Rates Canada

What mortgage products are Canadians buying?

This past week we saw a major rise in popularity in 2-year fixed mortgages. This might have been attributed to Scotiabank’s low 2-year fixed mortgage which was sitting at 2.49% as of last week, but has since increased to 3.89%.

4-year fixed mortgages continue to make for a stronger than normal showing as our lowest 2.94% is lower than any Big Five bank 5-year variable rate!

Mortgage Rates Canada

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