Thanks to the dive in oil prices, Canadian bond yields have simmered down a bit, giving some lenders a little room to ease fixed rates incrementally. This development offers a slight favour to mortgage seekers, particularly those with default insurance.
Fixed Rates Ease for Insured Borrowers
Falling rates have been mostly for default insured borrowers. Banks are maintaining plumper margins on uninsured financing, where there is less competition. For the moment, insured borrowers have an array of fixed-rate choices under four per cent, such as Citadel Mortgages with 3.83 per cent.
Uninsured Rates Remain Stubborn
On the uninsured side, there are still no advertised fixed offers that begin with a three. However, Ratebuzz in Ontario and credit unions in Manitoba and British Columbia will get you close, if you live in those regions.
Federal Reserve's Hawkish Turn
Setting oil aside, the week's headline was a U.S. Federal Reserve that has grown noticeably twitchy about inflation. Its hawkish turn could add support for bond yields, even on this side of the border. But a lot rides on if and how fast inflation unwinds after the U.S.-Iran peace deal.
Market Outlook
Robert McLister, a mortgage strategist and interest rate analyst, notes that the drop in oil prices has provided temporary relief. However, the Fed's stance and geopolitical developments could reverse this trend. Borrowers are advised to monitor rates closely.
