Robert McLister: Floating rate mortgages are suddenly hotter than a vinyl summer jumpsuit
Mind you, the big banks that bankroll most of the mortgages in this country have become a bit more margin obsessed as of late. Heading into what’s traditionally the slowest time of the mortgage year, they’re looking to offset declining lower flow with higher margins per loan.
If you’re already riding the floating rate wave, the news is all good. You’re about to save 25 to 50 basis points on your mortgage. Derivatives pricing in the bond market suggests there’s a better than three in four chance of the latter.
A half pointer would shave somewhere around $120 per month off the average floating rate mortgagor’s interest bill, depending on what kind of loan they have. Multiply that across millions of mortgages and suddenly our economy has more stimulus than a Red Bull factory.
More consumer spending means a higher probability of inflation bottoming out sooner and less chance the central bank needs to cut as much next year. That’s not to mention the gas Trump is expected to throw on U.S. growth, which could indirectly help our struggling economy — assuming Team Trudeau can sweet talk the incoming president out of painful Canadian tariffs.
If we strip away all this market drama and just look at forward rate data from CanDeal DNA, it continues to suggest 100 to 125 basis points of central bank rate cuts from here. If that outlook proves true, it favours variable and three-year fixed mortgage rates the most. And wouldn’t you know it, borrowers are already piling into these terms like they’ve got insider information.
Mortgage rates
The rates displayed below are updated by the end of each day and are sourced from the Canadian Mortgage Rate Survey produced by MortgageLogic.news. Postmedia and Imaginative. Online Inc., parent of MortgageLogic.news, are compensated by certain mortgage providers when you click on their links in the charts.