Fixed mortgage rates are falling!!!!
Fixed mortgage rates in Canada are decreasing, while variable rates continue to rise. This follows the trend of declining 5-year Government of Canada bond yield. This is because fixed rates are priced about 120 basis points below variable rates, which is a clear indication of rate cuts by the Bank of Canada later this year. It looks like 5-year fixed rates could drop to the “low fours” by the spring homebuying season, and the possibility of rates in the high threes cannot be ruled out.
Borrowers are anticipating lower rates in the coming years, which explains the rising popularity of short-term fixed rates. According to the Bank of Canada, nearly a third of all new mortgage originations as of November had a fixed-rate term of under three years. Rabidoux predicts that this trend will continue as long as expectations are for rates to come down in the near term. On the other hand, variable-rate products are back to making up a more historically average share of new mortgages, with 22% of new originations having a variable-rate mortgage in November.
The market is heating up fast, if you are a buyer, I highly recommend getting off the fence ASAP. Bidding wars are back and it will get really hard to purchase a property very soon.