Gap narrows between variable and fixed-rate mortgages after Bank of Canada rate cut
Robert McLister: Three year fixed rate mortgages still the best value
Following the Bank of Canada’s latest rate slash, most lenders have trimmed their variable rates by a quarter point. This means the leading variable rates are now a mere 86 basis points above the lowest fixed rates — compared to more than 150 basis points in March.
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That, along with expectations of more Bank of Canada rate cuts, will coax more borrowers to roll the dice with a floating rate. Yet the spread will have to narrow further before significant numbers of borrowers jump on the variable bandwagon. It’ll be many moons before we hit the 57 per cent market share variables had in 2022.
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For those who can’t stomach rate risk, insured five-year fixed rates are now as low as 4.44 per cent. (Hopefully, fours are lucky.) Meanwhile, the uninsured variety has finally broken the five per cent barrier and now sits at 4.99 per cent.
The best value in the fixed space remains the three-year — especially if you can find one at or below 4.99 per cent. Fixed three-years don’t model out as well as variables in rate simulations, but many folks prefer their certainty through 2027.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
Want to know more about the mortgage market? Read Robert McLister’s new weekly column in the Financial Post for the latest trends and details on financing opportunities you won’t want to miss.
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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.
