Despite banks’ drop in funding costs, however, many question whether they’ll price as aggressively this time around. Finance Minister Flaherty has strongly “discouraged” them from combative rate “sales.” (See: Flaherty on Rates)
So far, only a few lenders have lowered rates more than five basis points in the last week or so, despite yields diving 30 bps from April highs.
There are, mind you, some unpublished 5-year deals in the low 3.00% range through brokers. But they are available only on insured mortgages and/or those having restrictive terms.
If you need a pre-approval, a conventional mortgage, or a long-term (i.e., 90-120 day) rate hold, you’re generally looking at 3.29% +/- on a 5-year fixed.
If yields break below 1.30%, all bets are off. We’ll see competition heat up, if not from banks, then from non-bank lenders who don’t rely on bank funding and aren’t under federal regulation (like credit unions).
Rob McLister, CMT
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