In response to the Bank of Canada’s drop in the overnight rate, banks have finally lowered their prime rates. However they did not pass on the full quarter point. They have reduced their prime by .15% to 2.85%. This is the first time ever that Canada’s official prime will have changed by less than 1/4%. At least back to 1935 when Bank of Canada starting publishing this data.
TD Canada Trust had previously said that they wouldn’t cut prime “at that time”. But they have now followed RBC and the rest of the big 5.
Banks are saying that the amount that they cut the rate balances our their actual cost of funds and still allows Canadians to save money on variable rate mortgages and lines of credit.
The 5 year bond yield which leads fixed mortgage rates, closed at another record low today. .76%. So considering that the fair value for a discounted 5 year fixed rate should be in the range of 2.25%. So we will see what the banks do on the fixed rate side in the coming days. Looking at the above, fixed rates should come down some more.
Markets are now pricing in a 61% chance of another rate cut in March.
So all great news for the spring market. An awesome opportunity to get into the housing market right now. If you are considering it, your first step is to seek advice from your Invis Mortgage consultant. We are here to help.
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