What the Latest Canadian Employment Data Mean for Our Mortgage RatesMay 12, 2014
Is Rising Inflation a Warning That Canadian Mortgage Rates Are On the Way Up?May 26, 2014
After the longest and coldest winter I can remember, I am happy to report that the sun made an appearance over Toronto yesterday. There were actual sightings of people wearing shorts and rumour has it that the city sold its first bottle of suntan lotion for the year.
Five-year Government of Canada bond yields fell nine basis points last week, closing at 1.54% on Friday. Five-year fixed-rate mortgages are still offered in the 2.84% to 2.99% range, and five-year fixed-rate pre-approvals are available at rates as low as 3.09%.
Five-year variable-rate mortgages are offered at rates in the prime minus 0.65% range, which works out to 2.35% using today’s prime rate of 3.00%. The Mortgage Qualifying Rate (MQR) fell to 4.79% last week, making it a little easier for borrowers to qualify for variable-rate mortgages and for fixed-rate terms of less than five years. (If you want to learn more about how the MQR works, here is a post I wrote that explains it in detail).
The Bottom Line: The falling Loonie continues to provide stimulus to our economy, which David Rosenberg recently estimated is equivalent to a 3.00% cut in our interest rates. The benefits of the cheaper Loonie are materializing slowly, but they should help to brighten our economic prospects . I will continue to monitor those prospects and watch for any improvement that could affect our mortgage interest rates in the weeks to come.