For mortgage rates this week, it's the calm before the storm
Robert McLister: Bank of Canada expected to bring out the chainsaw and slash rates on Wednesday
Leading mortgage rates have gone into hibernation. After spiking last week, not a single rate from a leading nationwide lender has budged. That’s as rare as a comfortable seat on a discount airline.
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For mortgage rates this week, it's the calm before the storm Back to video
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The calm could end next week when the Bank of Canada brings out the chainsaw and slashes interest rates on Wednesday. In the meantime, the best values continue to be variable rates — that is, if you believe the bond market’s outlook. Derivatives traders are pricing in 175 basis points of further Bank of Canada cuts through 2025, according to forward rate data from CanDeal DNA.
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Despite that outlook, only one in ten mortgage shoppers chose a variable rate in August, the latest month for which data is available. With the September cut adding to this month’s cut, expect more folks to jump on that bandwagon, betting on a steady decline in the prime rate.
On the fixed-rate circuit, three-year mortgages in the mid-four per cent range are still the hottest commodity.
With all the rate cuts priced in, short-term fixed rates would normally be appealling in this environment, but lenders are being stingy.
Take the one-year fixed for instance. The leading advertised rate was 6.79 per cent (uninsured) a year ago; now it’s 5.99 per cent, only 80 basis points less. Compare that to the 204-basis-point plunge in one-year yields from the October 2023 high.
Clearly, banks are in no mood to give deals to borrowers who commit for only 12 months.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
Mortgage rates
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