Thinking about getting a mortgage or renewing? There’s good news for you.
Rates for a five-year fixed mortgage have dropped to their lowest levels since summer 2017, according to Ratehub.ca. Lenders are now offering fixed rates below three per cent, which is “the same or better” than rates for variable mortgages.
“The best five-year fixed rate on Ratehub.ca is 2.64 per cent, and the best five-year variable rate is between 2.61 and 2.65 per cent,” confirmed James Laird, the co-founder of Ratehub and president of CanWise Financial, to Toronto Storeys.
There are two reasons rates have dropped, Laird said. The first has to do with the fact that bond yields have fallen by a full percentage point since the fall.
Lenders borrow money from the bond market at one rate and then loan that money to consumers at a higher rate. If bond yields are low, lenders are able to lower their rates and still make a profit.
The second reason has to do with the seasonal market. “Lenders also typically offer their most competitive rates at this time of year in order to capitalize on the busy spring homebuying season, when Canadians are looking to secure a mortgage,” Laird said.
“With so many of the spring home purchases closing in June, the timing is excellent for consumers to take advantage of these new low rates.”
But that doesn’t mean consumers should agree to the first mortgage rate they’re offered. Laird advises borrowers to shop around and pay close attention to mortgage terms and conditions.
“The drop in the best five-year fixed rate by 0.6 per cent in four months highlights why consumers should continue to shop around to ensure that they are getting the best rate before locking in to a mortgage rate,” he said.
While consumers should always read the fine print, Laird said consumers should be particularly attentive to penalties imposed for breaking a mortgage, prepayment privileges, and HELOC limitations.
So who’s offering the lowest mortgage rates right now? According to Laird, that would be Equitable (fixed: 2.89 per cent, variable: 2.90 per cent), MCAP (fixed: 3.09 per cent, variable: 3.10 per cent), DUCA (fixed: 2.89 per cent, variable: 2.95 per cent) and Scotiabank (fixed: 3.24 per cent, variable: 3.35 per cent).
Coincidentally, on Friday, motusbank claimed they are offering the “best five-year fix closed mortgage rate in the country” at 2.90 per cent.
“motusbank believes all Canadians deserve to take a shot at homeownership,” said Dave Baldarelli, motusbank’s COO, in a press release. “We’re doing what we can to make that goal more attainable for first-time homebuyers and letting existing home owners catch a break if they want to take advantage of better rates to save money.”
Toronto Storeys has reached out to motusbank to confirm whether or not their announcement is in response to Ratehub’s report that rates are at their lowest levels.
Low rates are certainly good news for Canadians, but high house prices continue to push the dream of homeownership out of reach for many. A five-year forecast by Moody’s Analytics found the cost of housing will rise in all but two cities across the country. Toronto, in particular, is expected to have a 3.3 per cent increase in prices by 2024.