Houses for sale in Ottawa

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The big rate headline of the week comes courtesy of the Bank of Canada. Its quarter-point drop on Wednesday was the first cut since the toilet paper stockpiling days of March 2020.

The drop is nudging down variable mortgage and credit line rates. Depending on one’s loan type, rate and amortization, most floating-rate borrowers are seeing anywhere from $12 to $21 decreases in monthly payments or interest costs, per $100,000 of balance.

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The newfound rate-driven affordability — and try not to snicker at the word “affordability” — should spark more home buying. In fact, it may turn expectations into a self-fulfilling prophecy that supports home prices.

That said, with a weakening economy, it’ll take further rate reductions to keep fulfilling the “prophecy.”

On the rate front, insured and uninsured variable rates have dipped 19 and 25 bps respectively this week at national lenders.
Insured variables are now as low as 5.65 per cent at nesto. Uninsured variables may require another BoC rate chop before sliding under 6 per cent.

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Fixed rates are also on the move, with bond yields dropping as markets anticipate further BoC easing. That should take some of the leading national fixed rates lower by next week.

Regionally, some online brokers (e.g., Butler Mortgage) are already down to 4.49 per cent on insured 5-year mortgages. That’s the lowest in about a year.

Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.

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