RATE CUT MAY COME IN 10 WEEKS
Nationally leading mortgage rates didn’t
budge this week, with one exception. TD’S sensational uninsured variable-rate offer ended, nudging up the lowest nationally advertised variable rate from 6.19 per cent to 6.35 per cent (benchmark prime minus 0.85 per cent).
If you’re not jazzed by floating rates, True North Mortgage and Marathon Mortgage have rock-bottom six-month fixed offers on insured mortgages.
They’re at 3.99 per cent and 4.34 per cent, respectively.
The difference is that the latter may afford a slightly better renewal rate, particularly if you switch into an adjustable-rate mortgage in six months. But shop them both if you’re interested. (Marathon only sells through brokers.)
By the way, each of these lenders ding you with a one per cent fee if you don’t renew. That’s how they can offer such low upfront rates. On the other hand, both help insured borrowers qualify for bigger mortgages — since their rates, the lowest in Canada, make the mortgage stress test easier to pass.
Variable and shortterm mortgages will pique more people’s interest if the Bank of Canada gets serious about rate cuts. As we speak, investors in the world’s biggest casino, the bond market, are betting the first Bank of Canada cut will come within 10 weeks.
Next Tuesday’s crucial CPI report could stir up these odds significantly, so keep it on your radar.
In other corners of the rate market, there’s still solid value in three-year fixed rates near five per cent. You don’t get the benefit of potentially plunging rates, but that potential is already reflected in the lower threeyear rate you get upfront. Plus, you get upside rate protection if inflation isn’t as contained as economists thought.
Fixed rates tend to be less popular after Bank of Canada rate cuts, but if you believe markets efficiently price in the future, fixing a rate near five per cent isn’t the worst play, especially for those who like their financial coffee decaf.