Fixed mortgage rates are on the decline. Is now the time to lock in?
Rates on some fixed mortgages have dropped by a full percentage point in the past few months, opening up an opportunity for Canadians eyeing the spring housing market or with a mortgage of their own up for renewal.
While experts say there’s little downside to securing a cheaper rate today, committing to a long-term mortgage with rate cuts in the forecast might end up costing some households more.
Before the end of 2023, the lowest rate available on insurable five-year fixed rate mortgages dropped below five per cent, the first time it fell below that benchmark since last spring.
As of Thursday, rates as low as 4.84 per cent were available for that same product at multiple Canadian lenders, according to James Laird, co-CEO of Ratehub.ca.
That’s down more than a percentage point from highs seen last fall, Laird tells Global News.
Since late October, there’s been a shift in sentiment within the bond market that informs what rates banks offer on mortgages and other loans, he says.
As the Canadian economy has weakened and inflation has shown signs of cooling, forecasters are shifting their expectations for the Bank of Canada’s policy rate from “higher for longer” to now thinking “rate cuts are coming sooner rather than later,” Laird says.
That’s driven down yields on products like the government of Canada’s five-year bond in recent months — the key benchmark for fixed-rate mortgages of the same length.
The popular five-year fixed product is not the only mortgage seeing cheaper rates to start the new year. Mortgage Outlet COO and broker Leah Zlatkin notes that three-year fixed mortgages are also down from recent highs, floating just above the five-per cent market.
“It is a really good time to get a lower (fixed) interest rate
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