This week, many lenders including two large banks raised fixed mortgage rates. More hikes are possible as the short-term yields on bonds hit their highest level in 15 years.
Over the last two weeks, bond yields — which usually lead to fixed mortgage rates — have risen sharply. This week, the Government of Canada 2- and 3-year bond yields rose to levels not seen since the Financial Crisis of 2007.
BMO, one of the Big 6 Banks, increased its posted rates for 3- and 5-years by 20 bps (0.20%) this week. CIBC also raised its insured 5-year rate (high ratio) by 10 bps. These moves come after National Bank and RBC both increased their rates. Last week.
The na TweetRon Butler, of Butler Mortgage, suggested that lenders and brokers could increase fixed rates by another 15 to 20 basis points (bps) before Monday.
Weekly blog postIntegrated Mortgage Planners’ Dave Larock pointed out that fixed mortgage rates had risen so far by less than 50 bps (0.50%) in the last few weeks.
“[That] He wrote: “This leads me to think that more fixed rate increases are likely to be forthcoming to reduce the current gap.”
The mortgage arrears remained unchanged in March
According to the Canadian Bankers Association, Canada’s mortgage arrears rates remained at a level just above their all-time lowest in March.
In the last month, arrears, or mortgages in default by more than three months, remained unchanged at 0.15 percent. This is just one tick higher than the previous all-time record low of 0.14 %.
In the latest figures, just under 7,600 of over 5.1 million mortgages are in arrears. Saskatchewan (0,60%) and Alberta (0,35%) have the highest rates. Ontario (0.07%), British Columbia (1.11%) and Quebec (10.11%) are at the lowest.
The arrears rates are well below their peak during the pandemic when they reached 0.27 percent in June 2020.
Consumer confidence reaches a record high in 2023 due to the positive outlook for real estate
According to Bloomberg and Nanos’ weekly survey, a positive outlook for the housing market is driving consumer confidence up to its highest levels this year.
Bloomberg Nanos Canadian Confidence Index – BNCCI – rose from 52.45 to 50.12 last month, up from a low of 45.33 set in January 2023.
Nik Nanos is Chief Data Scientist and noted that “Sentiment towards real estate has continued to drive the positive trend.”
Nearly 35% of consumers anticipate that real estate prices will remain unchanged (down to 35% from 41% a month earlier), and 14,5% are expecting a decline (down to 14.5% from 18%).