Attention all fixed-rate mortgage shoppers: your window may be closing. As oil prices climb back over the $100 threshold highlighted by the Bank of Canada in its latest Monetary Policy Report, the risk of rising mortgage rates increases.
Oil-Driven Inflation Threatens Rates
The longer crude oil remains in triple digits, the greater the chance that mortgage rates and the prime rate will head north. Despite this, approximately four in 10 borrowers are still opting for variable rates, seemingly unconvinced that oil-driven inflation will persist.
Historically, the best variable rates remain unimpressive, particularly for those without default insurance. Citadel Mortgage leads the advertised uninsured market with a prime minus 0.76% offer, equating to 3.69%. Alternatively, floating-rate borrowers can save about 34 basis points by purchasing default insurance.
Short-Term Fixed Options
For those who believe the latest inflation spike is short-lived, True North Mortgage offers two-year insured rates at just 3.99%, or 4.49% for a one-year term. Both lead all national lenders. However, three-year fixed rates continue to be the crowd favorite, hovering around 4% plus or minus.
Lock In Now
If you are shopping for a fixed rate, the clock may not be on your side. Experts recommend locking in a rate hold early, because if Canada's five-year government bond yield closes above 3.33%, fixed rates could rise again.
Robert McLister, a mortgage strategist and interest rate analyst, notes that borrowers should act quickly. For the best national insured and uninsured mortgage rates, updated daily, visit dedicated mortgage rate pages.
