Oil continues to drive the near-term direction of Canadian mortgage rates due to its impact on inflation. Amid market volatility, some modest fixed-rate relief may be on the horizon.
Market Optimism and Falling Oil Prices
Markets are currently betting that Iran will formally sign the U.S. peace proposal, sparking a burst of optimism. This has driven West Texas Intermediate crude down more than seven per cent since Monday. Combined with a 50-basis-point decline in long-term U.S. inflation expectations—which fell to 3.4 per cent according to the University of Michigan—the move helped push Canada’s five-year government yield to a seven-week low on Friday.
Potential for Fixed-Rate Relief
If yields remain at or below these levels, some modest fixed-rate relief could be incoming. Borrowers may see slightly lower rates on fixed mortgages in the near future.
Variable-Rate Mortgages Still Popular
About half of borrowers are still opting for variable-rate mortgages, attracted by the fact that floating rates hold a roughly 55 to 60 basis point edge over fixed ones. Online brokers like Citadel advertise fixed rates as low as 3.92 per cent, while Butler Mortgage offers variable rates as cheap as 3.30 per cent. These offers apply to default insured mortgages, however, and do not help those needing to refinance or buy a home over $1.5 million.
Best Deals for Uninsured Mortgages
For uninsured mortgages, the lowest advertised fixed and variable deals are generally found at regional players like Ratebuzz (for Ontario residents) or credit unions. Borrowers in this category should explore these options to secure competitive rates.
Robert McLister is a mortgage strategist, interest rate analyst, and editor of MortgageLogic.news. Follow him on X at @RobMcLister.
