Nationally leading fixed rates inched up again this week, taking a few more baby steps in the wrong direction.
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The good news is, most lenders’ funding costs didn’t go up, so the pressure on fixed rates has eased a touch.
That’s despite a big pop in oil and U.S. inflation.
The bad news is funding costs rarely ignore inflation risk for long. And oil prices, as I type this, are ramping up again due to a certain president biting off more than he can chew.
When it comes to mortgage terms, Canadians are still snapping up variable-rates. However, anecdotal data from Dominion Lending Centres Group, the nation’s largest mortgage originator, suggests the stampede may be slowing to a brisk trot. This month to date, 52.8 per cent of its prime borrowers chose to float, down from 57.1 per cent last month.
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Part of that is growing inflation anxiety, and the fear it could translate into a higher Bank of Canada policy rate.
As it stands, the market doesn’t fully price in the first hike until January, with four more pencilled in through early 2028.
But five rate hikes totalling 125 basis points is just 15 to 25 basis points more than the average difference between fixed and variable rates.
For that price, most borrowers figure they’ll roll the dice on a more flexible variable mortgage and hope the market is right.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
For the best national insured and uninsured mortgage rates, updated daily, please visit our mortgage rate page here.
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