It’s hard to believe that 2019 is now among us. A new year brings another year of fun in the world of mortgages! At least, that’s how I look at it!  Who’s with me? No one? Alrighty then.  Let’s just provide you with some news and information to kick off 2019!

The Bank of Canada announced this morning that they will be maintaining their overnight rate, which means there is no increase to prime rate. This announcement came this morning, January 9th at 10am EST.

While back in the fall, the chances of an increase on this date seemed strong. However, new news of the GM plant closing in Oshawa, and the oil pipeline situation in Alberta were contributing factors in dampening our economic outlook.

The Bank of Canada is still on a mission to increase rates this year. However, they may not be able to increase them as quickly as they had hoped. They will however be watching closely and will be keeping a rate increase in their crosshairs.

Keep in mind, these Bank of Canada scheduled rate announcements affect prime rate only, which in turn affects variable rate mortgages and HELOCs (Home Equity Line of Credit). They do not have a direct impact on fixed mortgage rates. Prime rate can move up or down while fixed rates remain stable. They can however have an indirect effect on mortgage rates.

Right now, fixed mortgage rates are artificially high.  Bond yields, the driving force of fixed mortgage rates, are now at their lowest level since December 2017. At that time, five year fixed mortgage rates were as low as 2.89% with bank discounted rates around 3.34%. This is the level where rates should be, yet the lowest five year fixed rates today are 3.44% with bank rates at 3.89% – 4.04%. So why are mortgage rates so high right now?  For a detailed explanation, check out my blog from November 29th.

Mortgage lenders have the power to lower fixed rates right now, but they have not. Considering the prime rate will remain status-quo following this morning’s announcement, we may see lenders start to ease up a bit. Will rates drop back down to 2.89%? I would not hold your breath on that one. However, we may see some modest decreases over the next week or so. We’ll know soon enough.

You can follow the bond yields yourself here. 
You can read about the announcement here. 

Currently, there are 5 year fixed rates available for as low as 3.44% – 3.74%, depending on your exact situation. Variable rate mortgages range from prime -1.24% to prime -0.75% (2.71% – 3.20%). Mortgages with big banks hover around 3.59% – 4.04% for 5 year fixed or 5 year variable at prime -0.60% (3.35%).

There is also a great 7 year fixed mortgage available for 3.59% for those with high ratio (insured) mortgages or those with 35% or greater down payment/equity. (not available on homes valued at over $1 million if purchased after November 30th, 2016.  This rate applies to purchases and switches only).

The next scheduled interest rate announcement from the Bank of Canada will be on March 6th, 2019.

 

 

Paul Meredith is the author of the Amazon #1 best selling book, Beat the Bank – How to Win The Mortgage Game in Canada, and has ranked as one of the top 75 mortgage brokers in Canada since 2016. He was a finalist for Mortgage Broker of the Year in 2018, and can be seen as the exclusive mortgage broker on season two of TV’s Top Million Dollar Agent.