April historically marks an uptick in mortgage price competition as brokers and banks march out their most attractive interest rates – but with today’s fixed and variable rates already at record lows, lenders are engaging in fewer price skirmishes. However, spring mortgage borrowers are sure to be laughing all the way to the bank as low bond yields have pushed fixed rates far below last year’s discounts, and no move is expected from the Bank of Canada on the national cost of borrowing.
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Fixed Mortgage Rates: Unchanged
Remember when the 2.99-five-year-fixed whipped the market into a frenzy? It was just a few seasons ago, but the days of frantic basis-point buybacks seem long past. With today’s most competitive five-year fixed offerings hovering around the 2.30% mark for months – a mere 20 basis-point difference from today’s lowest variable options – lenders are taking a more relaxed approach to their spring pricing.
Bond yields, which have stayed stagnant and below the 1% threshold, are to blame for the lack of mortgage price movement and will stay at status quo; The U.S. Federal Reserve’s intention to take a cautious approach to monetary policy will support Canadian bond demand.
Variable Mortgage Rates: Unchanged
The Bank of Canada will reveal to what extent the federal Liberals’ budgetary cash infusion will impact economic growth in the quarterly Monetary Policy Report on April 13. While it’s anticipated the stimulus measures will boost GDP, it’s unlikely the BoC will move on the cost of borrowing. Earlier this month, Deputy Governor Lynn Patterson stated Canada will need at least two years to adjust to oil’s downtown as lower commodity prices drag on economic output. And, while strong GDP gains in January surprised economists, a dip in February exports show recovery is far from assured, derailing the possibility of rising rates. Meanwhile, the BoC is hesitant to further stoke household debt levels by chopping rates further; the parliamentary budget watchdog predicts debt will reach levels not seen since 1990 this year.
Click here to read the panel’s full April Mortgage Rate Outlook>