I remember when 5 year fixed mortgage rates first broke below 4% around 10 years ago. It was unreal to see rates this low, and many thought they couldn’t possibly get any lower. Especially considering they were in the 5-6% range just a year or two earlier.

Who knew how much lower they would become?

We’ve now entered the age of super low mortgage rates.

Each week, fixed mortgage rates are hitting new record lows, and lenders have been increasing their discounts on variable rate mortgages. Just a few short months ago, it was looking as though we were going to lose our variable rate discounts altogether, with some rates moving into prime + territory. This changed when the government started pumping money into our economy, eliminating mortgage liquidity concerns. This was a key contributor to the continually increasing discounts on variable rate mortgages.

5 year fixed rates have now fallen to as low as 1.74% for insured mortgages (those with less than 20% down payment and therefore requiring default insurance such as CMHC). It would also be available on existing insured mortgages. Variable rate mortgages are now as low as prime -0.80% (1.65%) for the same category. Similar rates can also be found on purchases with 35% or greater down payment / equity.*

 

Will Mortgage Rates Fall Further?

I’ve been saying for months that there is room for fixed mortgage rates to fall. Both fixed and variable. In my blog on April 29th, I mentioned that if volatility were to subside, and bond yields were to stay low, then we’d see much lower mortgage rates. This is exactly what has happened.

Even with rates as low as they are, there is still room for lenders to move even lower. Fixed mortgage rates are heavily driven by bond yields. Even if the yields were to remain at current levels, we’ll still likely see fixed rates drop further, providing that market volatility remains in check.

 

How Much Lower Will Mortgage Rates Fall?

It’s quite possible that we could see 5 year fixed rates for insured mortgages in the 1.49% – 1.59%, and variable rates as low as prime -0.95% (1.50%) by the end of the year. Possibly even by the end of the summer. Time will tell of course, and anything can happen.

*Mortgage rates vary based on down payment / equity, property value, purchase date, property use, etc. Send us an email or give us a call to find out the lowest rate you would be eligible for based on your situation.