The Bank of Canada’s rate announcement is tomorrow and many of the expert expect the Federal Bank to hold their target for the overnight rate steady at 0.25%. This means variable rates should, in theory, remain steady for the next little while. However, we’ve seen some variable rates come down to as low as Prime – 0.10% for a 4 year variable closed rate, with a 45 day quick close. This is the first variable rate offered below prime that we’ve seen for months and is great news for mortgage shoppers. Could this be a sign of confidence in an economic recovery from the banks? Or simply that inter bank lending is returning to normal and banks no longer need to hoarde cash.
We’ve also seen fixed mortgage rates come down in the past week as shown below. This is mainly attributable to the fact that the Government of Canada 5 year bond price has increased over the past week by 2.80%, reducing the yield, and enabling banks to drop 5 year rates. After speaking to a few brokers in the last day or so, they believe rates will come off a bit more in the near future. Again, it’s difficult to time these things, and if you do need a mortgage soon, it’s probably best to look into it now and get pre-approved, rather than trying to time the absolute bottom of the market.
|5-year fixed rates|
We’ll look out for the Bank of Canada announcement tomorrow and post the results as soon as we get them.