It's important for you to be aware of the current state of the market and of changes that may impact your clients.
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🇨🇦 March Market Update 🇨🇦 | |
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I hope you, your family and your business are doing well. It's important for you to be aware of the current state of the market and of changes that may impact your clients. Let me make this easier for you, here is your Mortgage Market Update for the month of March, all in one place.
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Insurable - *2.09% - 2.44% Uninsurable - *2.29% - 2.44% Insured/Insurable: Maximum Amortization of 25 years, Maximum Purchase Price of $999,999, Qualify at Benchmark Interest Rate.
Uninsurable: Any mortgage with an Amortization above 25 years, Value of the Property is $1M and above, Qualify at the greater of Benchmark Interest Rate or Contract Rate + 2% *Please be advised that interest rates are subject to change at any time, without notice* While variable mortgage rates tend to move up or down following movements in the Bank of Canada’s policy rate, fixed mortgage rates are more influenced by conditions in the bond market, which affects a lenders’ own borrowing costs. After hitting record lows this summer, fixed mortgage rates started to climb back up in early 2021. Encouraging signs for both the Canadian and U.S. economies are increasing concerns about rising inflation - and pushing up bond yields, which makes it more expensive for lenders to borrow. The recent increase in the bond markets reflects lenders, in turn, adjusting what they charge mortgage borrowers. Reporting shows that fixed rates are still rising, even with the Bond Market Buy-Back Program in full effect. Policymakers have been buying $4 billion in federal government bonds each week to help keep borrowing costs low. Economists say that pace may no longer be warranted, with an outlook that appears to show the economy growing at a much stronger clip than officials had been expecting. The Bank of Canada warned that we may see some ease back on the Bond Buy-Back Program in April, this will put even more upward pressure on fixed mortgage rates. |
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For now, however, the Bank of Canada has given variable-rates holders little reason to worry. In a recent speech, Bank of Canada governor Tiff Macklem said the central bank remains committed to holding its key interest rate where it currently is until the economy is back on solid footing. “We have committed to keeping our policy interest rate at the effective lower bound until economic slack is absorbed so that our inflation target is sustainably achieved,” Macklem said.
In its latest economic forecast, the Bank of Canada projected it will take Canada until 2023 to fully absorb economic slack, a measure of unused resources in the economy.
The spread between variable and fixed mortgage rates is about to get “noticeably wider,” McLister told Global News via email. “It’ll probably get back above half a percentage point, a spread we haven’t seen for two years,” he said. |
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RBC put out a statement last month saying the main near-term risk right now is the market overheating and NOT price collapse. The main concern RBC is seeing in the housing market is a question of a market that potentially gets overextended. When markets begin to overextend, regulators and policymakers will always find a need to step in. No one likes regulatory changes, but we must always be prepared for them because regulatory changes always impact our business. |
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| | I write blogs and create all other types of content about the Canadian mortgage industry. Whether you are a finance or real estate professional, investor, or a first-time homebuyer, my goal is to become your ultimate resource for all things mortgages.
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