Falling fixed mortgage rates could be booster juice for buyers
Robert McLister: Falling rates will entice more potential homebuyers to trade window shopping for the real deal — actual buying
Donald Trump’s tariff escapades have cast a pall over Canada’s economic outlook. Uncertain investors and those who think tariffs will lead to a Canadian slowdown have piled into bonds.
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Other things equal, more bond buying leads to lower bond yields, which usually means lower fixed mortgage rates. And that’s exactly what we’re seeing.
Tariff turmoil has driven fixed rates a quarter percentage point below floating rates in some cases. However, money markets now imply a two in three chance that variable rates will drop another quarter point after the Bank of Canada meets next, on March 12.
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In the last week, the lowest nationally advertised fixed rates have fallen for seven out of the 12 terms we track. The insured five-year fixed, for example, just plummeted 29 basis points to 3.85 per cent (from Citadel Mortgage). We haven’t seen that kind of rate since April 2022.
As mortgage rates dip in the threes, that’s both a psychological stimulant for the real estate market and a buying power booster. These twin forces will entice more potential homebuyers to trade window shopping for the real deal — actual buying.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
Mortgage rates
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