Weekly Digest

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April 11th, 2024

There are lots of changes in the mortgage market this week.

See below for;

A. Update to the Bank of Canada + economic data

B. Changes to First Time Home Buyer criteria, including insured lending

A Bump in the Road

As expected, the Bank of Canada held the overnight rate yesterday.

But fixed rates are now going UP in Canada?

Concurrent with the B.O.C announcement, US CPI was released and it shot up to 3.50%. US Inflation is now 70 basis points above Canada’s and this has caused the bond yields to react. We are back up to 3.75% on the 5 yr yield, which directly impacts fixed rates.

Large pricing exceptions and rates in the high 4% range will soon disappear.

Important announcements for this, and next week;

• Bank of Canada rate decision (Wednesday, April 10)

  • No changes

• U.S. CPI (Wednesday, April 10)

  • A unfavorable meeting with an increase to CPI

• Canadian CPI (Tuesday, April 16)

  • Stay tuned

The road to lower rates is always a rocky one. Consider the US inflation data from yesterday a bump in the road.

Trigger For Rate Cuts

Reminder from previous updates. How will we know the first rate cut is here?
The easing cycle will be recognizable when;

• Inflation starts with a “2”

• Unemployment starts with a “6”

• BoC communications and language will turn less hawkish

• The following meeting’s rate cut probabilities will exceed a 60% chance.

  • Currently June’s odds are now at 51%

We are as close as we can be to seeing a reduction in the overnight rate. 

Pre-Budget Announcements

Liberal votes share is falling, and fast. Now only 14% of those aged 30 to 39 support this government, and this is mainly due to unaffordable housing and living expenses.

Pre-budget announcements are below including a change to RRSP’ withdrawals, insurance amortization and other items.

• Launching a new $15 million Tenant Protection Fund. This would provide funding to legal aid and tenants’ rights advocacy organizations to better protect tenants against unfairly rising rent payments, renovictions, or bad landlords.

• Creating a new Canadian Renters’ Bill of Rights. This would require landlords to disclose a clear history of apartment pricing so renters can bargain fairly. They will also crack down on renovictions, create a nationwide standard lease agreement, and give renters more agency.

• Making sure renters get credit for on-time rent payments. Amending the Canadian Mortgage Charter and call on landlords, banks, credit bureaus, and fintech companies to make sure that rental history is considered in your credit score.

Changes For First Time Buyers

The long awaited 30 year amortizations on insured mortgages is finally here BUT it comes with a major asterisk.

• Purchase must be NEW (pre-construction purchases only)

  • Keep in mind, most builder require 15-25% in the first 365 days anyway…

• Buyer must be a first time homebuyer

Another announcement is an increase to the RRSP withdraw limit of $60,000. Up from its current $35,000. This change will be implemented April 16th, 2024.

• This is a major win in my opinion to help young savers with tax benefits.  

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 5.09%

• 3 year fixed, 30 yr amortization – 5.29%

• 2 year fixed, 30 yr amortization – 6.00%

• 5 year variable, 30 yr amortization – Prime – 0.80% = 6.40%

• 5 year fixed, 25 yr amortization – 4.99%

• 3 year fixed, 25 yr amortization – 5.19%

• 2 year fixed, 25 yr amortization – 5.90%

• 5 year variable, 25 yr amortization – Prime – 0.90% = 6.30%

INSURED

• 5 year fixed, 25 yr amortization – 4.89%

• 4 year fixed, 25 yr amortization – 4.89%

• 3 year fixed, 25 yr amortization – 4.99%

• 5 year variable, 25 yr amortization – Prime – .90% = 6.30%

Fast Facts

• $9.8B – Ontario’s projected deficit for 2024-2025, according to the budget.

• 598 – Stolen vehicles that various policeforces and the Canada Border Services Agency recovered in a bust at the Port ofMontréal. The value of the contraband cars was ~$34.5 million.

• 1,000,000 – the estimated number of tourists in Niagara Falls to view the eclipse.