Canada’s 5-year bond yield closed near a 3-week low today, settling at 2.43%. That’s down from its June 10 high of 2.81%.
While there’s been a noticeable dip in yields, there hasn’t been much reduction in 5-year fixed mortgage rates (which track yields). At the most, we’ve seen a few non-bank lenders drop 5-year rates by 0.10% lately. The Big 5 banks have not lowered advertised rates at all.
One lender sent an email today suggesting that banks have changed their focus from aggregating clients to profitability. Given the banks just went through a vicious market share war, they may be less inclined to discount rates now with only four months to hit their year-end income targets.
The lender went on to say: “There may be some movement soon, but banks are ensuring bond prices stay consistent before they make a move.”
“There may be some movement soon, but banks are ensuring bond prices stay consistent before they make a move.” …really? Classic bank rhetoric…
Have they not seen the movement of the bond rates recently? If memory serves, mortgages could be had for under 4.00% last time the 5yr BoC was @ this point. Glad I am floating…
How typical, just like crude oil, it only goes UP, and not DOWN, regardless of the external environment
Funny how mortgage rates ‘track’ the 5 year yield in only one direction!
The BoC has lowered rates to historical levels yet banks refuse to listen and help the economy.
Makes you realize who really has the power and who really runs the economy and, by proxy, the country.
How long did it take the banks to raise rates when bond yields were going up? Funny double standard.
Although it’s not much, ING Direct updated the rates on the website yesterday:
5 yr fixed: 4.49% -> 4.39%
4 yr fixed: 4.09% -> 3.99%
Bruins1970again: The fixed mortgage rates have very little to do with the BoC overnight rate.
The variable rate is related to the BoC overnight rate.
The fix rate is related to the current yield of bonds, which a couple of months ago got you a mortgage at around 3.85% for 5 years.
Personally I will stick with my Prime -0.8% variable mortgage (1.45%) ….
Hey Rob M.-
Great point – thanks for clarifying.. looks like you and I have the same thing going (assuming 5yr VRM as opposed to HELOC). Do you have any new info on HELOC rates? I recall in the winter a number of FI’s cranked up their rates – are you seeing these rates retreat?
great stuff as always Rob!
Hi bruins1970again,
This is the other Rob M (McLister that is). The best widely available LOC deal I’m aware of is prime + 0.75%.
There are a couple lenders lower, depending on your occupation and required LOC amount. Unfortunately they’re not deals lenders like to publicize. Any high volume mortgage planner should know about them though.
Go Bruins,
-rob
Would it be prudent to stay with a HELOC, I currently have Cdn Tire All in One at their Prime rate (2.25) and was curious about the prime -0.75. Would it be lower then Cdn Tire?
Hi TSP, That should have read prime “plus” 0.75%. CT is still better at prime (which they no longer offer by the way).
Have an excellent weekend…
-rob
the major banks offer 5.85 as posted, but the best rate I got is appx posted – 1.7 => 5.85 – 1.7 = 4.15. Which i’d say it’s not bad at all.
Plus, since I am planning to rent out my existing house the relationship with the banker definitely helps.
REinvestor.toronto
OK, I’ll ask. How did the “relationship with the banker definitely help.”?