Money: 'Pretty cheap money': Canadian mortgage rates falling to their lowest level in 2 years - - PressFrom - Canada
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Money'Pretty cheap money': Canadian mortgage rates falling to their lowest level in 2 years

12:51  07 june  2019
12:51  07 june  2019 Source:   cbc.ca

What slump? RBC, TD defy Canada housing decline with loan growth

What slump? RBC, TD defy Canada housing decline with loan growth Canada’s two largest banks are defying cooling housing markets in the country by posting solid growth in home loans. Royal Bank of Canada, the nation’s largest mortgage lender, reported Thursday that its domestic mortgage book expanded 5.2% in the fiscal second quarter from a year earlier, while Toronto-Dominion Bank’s mortgages and amortizing home-equity lines had a 5.8% increase. Both banks reported earnings that beat analysts’ expectations. The two lenders are bucking the trend for the overall industry, which has seen year-over-year mortgage growth slide to a 17-year low of 3.

House prices may be as high as ever in many parts of the country, but Canadian homebuyers are being offered some of the lowest mortgage rates seen in years as lenders battle to drum up new business. Rates on a standard five- year fixed- rate mortgage have fallen to their lowest level in two

Mortgage rates fall to lowest ever levels . Barclays has also reduced rates across its range by up to 1 percentage point, and is now offering its Rates on a standard five-year fixed- rate mortgage have fallen to their lowest level in two years , according to rate comparison website, Ratehub.ca.

'Pretty cheap money': Canadian mortgage rates falling to their lowest level in 2 years

House prices may be as high as ever in many parts of the country, but Canadian homebuyers are being offered some of the lowest mortgage rates seen in years as lenders battle to drum up new business.

Rates on a standard five-year fixed-rate mortgage have fallen to their lowest level in two years, according to rate comparison website, Ratehub.ca.

Borrowers just about everywhere across the country can take their pick of offerings well below three per cent at the moment, says James Laird, the site's co-founder and president of mortgage brokerage, CanWise Financial.

That's partly for seasonal reasons, he says, in that the spring months are typically the best ones for home buying, as families try to get moved and settled before summer vacations and then the new school year sets in.

Royal Bank CEO brushes off housing worries as profits jump amid loan growth

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House prices may be as high as ever in many parts of the country, but Canadian homebuyers are being offered some of the lowest mortgage rates seen in years as lenders battle to drum up new business. Rates on a standard five- year fixed- rate mortgage have fallen to their lowest level in two

Rates on a standard five-year fixed- rate mortgage have fallen to their lowest level in two years , according to rate comparison website, Ratehub.ca. Borrowers just about everywhere across the country can take their pick of offerings well below three per cent at the moment, says James Laird, the site's

"Promotions are April, May and June … when all mortgage companies try to make sure they are on track to hit their annual targets," Laird said in an interview. "Anyone who's behind at this point would be aggressive with the margins they're willing to fund mortgages at right now."

At the moment, Laird says he's seeing five-year fixed rates as low as 2.64 per cent for certain buyers, and even higher-risk borrowers can easily find a loan for 2.89 per cent. That's the lowest range since the summer of 2017, he says, and a big reason why is the bond market.

'Pretty cheap money': Canadian mortgage rates falling to their lowest level in 2 years© Provided by Canadian Broadcasting Corporation

Unlike variable rate loans which take their cues from the Bank of Canada's benchmark rate, lenders finance fixed-rate loans based on the rates they can get in the bond market. Essentially, they'll borrow money themselves at one rate, loan it out to a borrower at a higher rate and make money on that spread.

CMHC defends mortgage stress test changes amid calls for loosening rules

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House prices may be as high as ever in many parts of the country, but Canadian homebuyers are being offered some of the lowest mortgage rates seen in years as lenders battle to drum up new business.

Fixed mortgage rates dropped again this week, putting them at their lowest level since May 2013—and analysts predict they’ll continue falling . With interest rates falling , mortgage applications nearly doubled in the week ending Jan. 9, compared with the week before, according to the Mortgage

So current rock-bottom interest rates on fixed loans are no coincidence, considering the yield on a five-year Government of Canada bond dipped below 1.3 per cent this month. If a lender can borrow funds for as little as 1.3 per cent then turn around and make money by loaning it out for twice that rate, they have every incentive to keep offering those deals.

"The hard cost of funding these loans is going down," Laird said. "And at the same time we are at the tail end of the most competitive market, when lenders fight for [business], so that's when they are willing to thin out their margins a bit to attract volume."

Less popular loans

Variable rate loans are also sliding lower, too.

Most borrowers prefer the peace of mind of fixed rate loans, but lenders can tempt borrowers to variable rate loans with even better rates — even if they're only temporary.

Laird says typically it takes a spread of about a full percentage point to entice most people to make the leap. Which is why those loans are even less popular than usual because that premium has almost completely vanished.

Metro Vancouver housing sales remain sluggish in May

Metro Vancouver housing sales remain sluggish in May Housing sales in Greater Vancouver were 22.9 per cent lower last month than the 10-year average and the lowest for May since 2000, according to a report by the Real Estate Board of Greater Vancouver (REBGV) published Tuesday. The real estate board says a total of 2,638 homes were sold in May 2019, a 6.9 per cent drop from the 2,833 homes sold in May 2018. However, sales were up 44.2 per cent from the 1,829 homes sold in April. © Sean Kilpatrick/The Canadian Press The Real Estate Board of Greater Vancouver says tougher mortgage rules and a federal stress test are behind reduced demand in the housing market.

' Pretty cheap money ': Canadian mortgage rates falling to their lowest level in 2 years | CBC News. Across the province, the residential sector recorded building permit values of 3.7 million, off by 21.4% year over year.

Long-term rates last dropped to this level in September 2017. “While the drop in mortgage rates is a good opportunity for consumers to save on their mortgage payment, our research indicates that there can be a wide dispersion among mortgage rate offers," Freddie Mac's Sam Khater said in a

He says the best variable rate loans are about 2.65 per cent at the moment, which is barely better than the fixed rate, for a lot more risk.

Anyone signing up for that loan today is "assuming the Bank of Canada is going to be forced to drop their rate once or twice. That would be the only way to justify taking it," he said. The bank's benchmark rate is 1.75 per cent.

Trading in investments known as overnight index swaps suggests investors think there's about a 50 per cent chance of a rate cut by the central bank this year — but two would be very unlikely, and never mind any more beyond that.

Lower rates could be good news for those who've already bought, too.

1 in 6 mortgages up for renewal

A recent report by National Bank found that a little more than one out of every six mortgages in Canada is up for renewal this year, and as recently as January the bank was calculating that most of them could expect to be paying between 70 and 90 more basis points on their next loan than they were on their current one. (A basis point is 1/100th of a percentage point, so a jump of 70 basis points would be a loan that went from 3 to 3.7 per cent, for example.)

Delinquency rates rise as Canadian credit card balances grow

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The 30- year fixed- rate average fell to 4.63 percent, its lowest level since September. Investors have been moving their money into safer assets such as bonds, causing yields to fall . The yield on the 10- year Treasury declined to 2 .85 percent Friday, a drop of close to 40 basis points in one month.

' Pretty cheap money ': Canadian mortgage rates falling to their lowest level in 2 years | CBC News. Before hiring the inspector, ask about their qualifications and experience, inspectors in B.C. should be registered and licensed through Consumer Protection BC (CPBC).

But thanks to the steep slide in mortgage rates since the start of the year, most people with loans up for renewal now have no need to fear a big jump in their rate when the time comes.

"With the recent drop in mortgage rates, those households will be renewing at rates barely above their previous ones," National Bank economist Matthieu Arseneau said.

Laird doesn't see anything on the immediate horizon that could derail the era of lower rates, but he does think the federal election in October is worth paying attention to for how it relates to housing.

Housing policy is bound to come up on the campaign trail, and he expects to hear a lot of talk about changing stress test rules and extending amortization periods in the coming months.

But until that happens, Laird's expectations for the mortgage market can be summed up succinctly: "Pretty cheap money."

Read more

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Canadians have taken on so much debt that monthly payments are eating up a record share of paycheques. The typical Canadian spent 14.9 per cent of their disposable income making payments to cover debts in the first quarter of this year, according to an analysis of Statistics Canada data by National Bank of Canada. That’s up from around 11 to 12 per cent in the 1990s, and just below 13 per cent in the years before 2017, when the Bank of Canada started hiking interest rates, pushing debt payments up. © Provided by Oath Inc. National Bank senior economist Krishen Rangasamy sees a problem in this for businesses that rely directly on consumers.

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