MORTGAGE NEWS

2022-1-04

Markets Increasingly Expect a Bank of Canada Rate Hike This Month




Earlier this week, RBC's CEO called for the Bank of Canada to take "rapid action" and raise interest rates to bring inflation under control. According to some forecasts, the Bank of Canada (BoC) may heed that advice. Despite the central bank's latest guidance that it won't hike rates until the "middle quarters" of this year, economists at J.P. Morgan expect the Bank to raise interest rates at its upcoming meeting on January 26. That would mark the BoC's first interest rate move since March 2020, and its first rate hike since October 2018. "Based on rhetoric from the Bank of Canada in December, it was clear that labour market dynamics and outperforming economi...


2022-1-04

2022 Housing and Interest Rate Forecasts




For the second straight year—and in the face of an ongoing pandemic—the Canadian real estate market has continued to defy gravity. Projected figures for 2021 suggest home sales will end the year 21% higher than 2020 (to a total of 668,000 transactions), while home prices will end the year up 21.2% to an annual average of $687,500, according to the Canadian Real Estate Association. Tight supply has been a recurring theme, with CREA noting the months of inventory measure has fallen below two months worth of supply just four times in history: in February and March of 2021, and again in October and November. "While price growth is not expected to be as extreme in 2022, many of the c...


2021-11-16

Fixed-Rate Increases Costing Today’s Homebuyers Over $10,000 More in Interest




Fixed mortgage rates have been climbing steadily since September. But by how much and at what cost to new homebuyers? We’re about to answer that. But first, let’s look at what’s been driving rates higher. After a short-lived spike in rates earlier in the year, fixed mortgage rates have spent most of 2021 going sideways, just off their all-time lows reached in December 2020. They got a second-wind in late September, soon after bond yields started shooting upwards. As the chart below illustrates, the 5-year Government of Canada bond yield, which leads fixed mortgage rates, took two steps higher during both those periods. Bond yields started to rise in September at the first h...


2021-11-04

Big Banks and Other Lenders Start Hiking Fixed Rates




As expected, some major mortgage lenders have started a fresh round of rate hikes following this week’s run-up in bond yields. RBC, BMO, CIBC and National Bank of Canada (NBC) have all raised fixed mortgage rates following this week’s Bank of Canada rate decision. RBC hiked it special-offer 5-year fixed rate by 20 bps to 2.79%. It also raised its 5-year variable rate 5 bps to 1.65%. BMO raised its default-insured (high ratio) 5-year fixed by 23 basis points to 2.62% and its uninsured rate by 20 bps to 2.79%. It also raised its 5-year variable rate 10 bps to 1.65%. CIBC hiked its insured 5-year fixed rate by 20 bps to 2.42% and its uninsured 5-year fixed by 20 bps to...


2021-10-12

Mortgage Rates Rising as Bond Yields Surge




A growing number of lenders have been raising interest rates over the past week in response to rising bond yields, including RBC, BMO and National Bank of Canada. Last week, BMO raised its insured 5-year fixed rate by 20 basis points, bringing it to 2.19%, and hiked its uninsured 5-year fixed by 10 bps to 2.39%. It also raised its special-offer 3-year fixed by 10 bps. RBC reversed previous rate cuts announced last month by increasing its 5-year fixed rates by 25 bps to 2.44%. National Bank of Canada was another Big 6 bank to increase rates, bumping its 5-year fixed rates by 5 bps to 2.29%. Other lenders that have hiked rates over the past week include Desjardins, Simplii Financia...


2021-10-04

TD, CIBC Hike Mortgage Rates




Exactly two weeks after TD Bank cut its special-offer mortgage rates by a whopping 45 basis points, the bank reversed course and hiked its 5-year fixed rates by 30 bps. The bank also increased its 3-year fixed rate by 10 bps. That was followed by rate hikes from CIBC, which on Friday reversed previous 5-year fixed rate reductions by hiking its insured product by 20 basis points. It also increased its 7-year fixed mortgage rate. CIBC’s special-offer rate changes: 5-year fixed (high ratio): 1.99% to 2.19% 5-year fixed: 2.24% to 2.36% 7-year fixed: 2.94% to 3.09% TD’s special-offer rate changes: 3-year fixed: 2.14% to 2.24% 5-year fixed (high ratio)...


2021-09-27

Bond Yields Are Rising. Are Fixed Mortgage Rates Next?




Some of Canada’s Big 6 banks made headlines last week by lowering fixed mortgage rates. But might they soon have to pull a U-turn? Bond yields rose sharply on Monday in the U.S. and Canada, and as CMT readers know, bond yields typically lead fixed mortgage rates. In Canada, the 5-year bond yield closed at 1.069%, a 20-month high. That close was above a previous “high water mark,” and saw the 5-year yield return to pre-pandemic territory. In the U.S., the 10-year bond yield rose to a nearly three-month high after the Federal Reserve hinted it might soon taper its asset purchasing program. The question on the minds of brokers and borrowers alike is, will fixed mortgage rates ...


2021-09-08

Bank of Canada Keeps Status Quo, Rate Hikes Still on the Table for Next Year




The Bank of Canada delivered a status quo rate decision today, keeping its target rate and bond purchases unchanged. This was expected, in part due to the Bank’s longstanding tradition of keeping a low profile during election campaigns so as to remain apolitical. The overnight lending rate remains at 0.25%, where it’s been since March 2020, and the Bank’s bond-buying program (a.k.a., “Quantitative Easing” or QE) was left at $2 billion per week. Despite some bumps in the economic recovery, including a surprise 1.1% decline in GDP in the second quarter, the BoC said today the recovery should continue to pick up steam towards the end of this year. “The Bank continues to ...


2021-09-18

Latest in Mortgage News: Big Banks Lowering their 5-year Fixed Rates




RBC Royal Bank became the third Big 6 bank to lower its 5-year fixed mortgage rate over the weekend. The bank dropped its uninsured 5-year fixed rate by 25 basis points to 2.19%, according to data from RateSpy.com. The move came days after similar cuts by CIBC and TD Bank last week. On Friday, CIBC lowered its rates by 5 basis points, bringing its special-offer uninsured 5-year fixed rate to 2.39% and its 5-year variable rate to 1.35%. TD Bank was the first of the banks to lower its on Thursday. TD’s moves were more significant, lowering its rates by 45 bps. That brings its insured (high ratio) 5-year fixed to 1.89% (from 2.34%) and its uninsured 5-year fixed to 1.99% (from 2.4...


More on Benchmark Changes




Our recent story on changeovers in the benchmark 5-year bond sparked some good questions about how and when the benchmark changes. As noted in that previous story, when the market rolls over to a new benchmark bond, it can play havoc with bond yield charts (which many mortgage pros watch for clues on rate direction). Here are some related FAQs on bond issuances and benchmarks: Question: How often does the Bank of Canada (BoC) auction off new 5-year government bonds? Answer: The Bank of Canada currently auctions two new 5-year bonds per year. Thereafter, each of those bonds is re-opened (re-auctioned) two to four more times. More info Question: Does the benchmark change because t...