Weekly Digest

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June 20th, 2024

Partner Trip for 2025

April (Spring) 2025, our annual realtor trip will be held in Nashville, Tennessee.

Qualifying is easy. Send $1,500,000 in total closed mortgage business to automatically qualify.

Rate Psychology Moving Forward

Bond yields are falling, which is helping fixed rate pricing.

Since May 29th, yields have fallen from 3.80% down to the current levels of 3.30%. Banks have, and will continue to drop their fixed rate mortgage pricing. Keep in mind, Banks are slow to react with their internal rate drops to help drive profits. When bond yields fall, the fixed rates do not move instantaneously.

Clients are still favoring 3 year fixed terms, but variable rates are making a resurgence again.

3 year fixed rates are sitting in the low 5%s, and variable rates in the low 6%s. With two to three more rate cuts priced in, a variable rate may soon equal current 3 year fixed pricing. Variable’s “wait and see” approach may win out in the long run.

US Inflation Data

Bond traders have had the US May CPI report circled on their calendars for weeks. We were hoping for a soft reading and we got just that.

• U.S. headline inflation was flat at 0.0% month over month (with an estimate to come in with a 0.1% gain). This is the lowest since July 2022. Annualized it was 3.3% y/y while being estimated at 3.40%.

• Core inflation was also the lowest since April 2021.

The next critical date for Canada is our CPI reading on June 25. As oil prices have been falling, we should see a soft reading next week.

Employment

Canada’s Unemployment rate rose to 6.2% and Canada lost 35,600 full time jobs. We added 62,400 part time jobs. Capital Economics projects unemployment to reach 6.70% later this calendar year.

Mortgage Deal Flow

Mortgage originations continue to hit records lows. The below chart shows numbers of mortgages (conventional and insured) that are hitting the books in. Q1 was a tough start to 2024 for most mortgage professionals.

CMHC says the country’s total residential mortgage debt totaled $2.16 trillion as of February this year, up 3.4% year-over-year and representing the slowest growth in 23 years. 

Federal Debt Load

The chart below speaks for itself…

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 5.09%

• 3 year fixed, 30 yr amortization – 5.24%

• 2 year fixed, 30 yr amortization – 6.00%

• 5 year variable, 30 yr amortization – Prime – 0.90% = 6.05%

• 5 year fixed, 25 yr amortization – 5.04%

• 3 year fixed, 25 yr amortization – 5.19%

• 2 year fixed, 25 yr amortization – 5.95%

• 5 year variable, 25 yr amortization – Prime – 0.95% = 6.00%

INSURED

• 5 year fixed, 25 yr amortization – 4.74%

• 4 year fixed, 25 yr amortization – 4.79%

• 3 year fixed, 25 yr amortization – 4.84%

• 5 year variable, 25 yr amortization – Prime – .95% = 6.00%

Fast Facts

• $5.47 billion – Total estimated fines against TD Bank, Canada’s second-largest lender, tied to U.S. money-laundering probes, according to Jefferies Financial Group analysts.

• 20.5% – Jump in Canadian building permits issued in April compared to March of this year, the largest single-month increase since 2020. On the year, building permits were up 27.9%.

• US$10,000 – What Singapore Airlines is offering passengers with minor injuries from a May flight that hit extreme turbulence. The event killed one person and injured dozens more.

• US$350,000 – Value of a Jackie Robinson baseball card that will be sold at the first live auction hosted by Sotheby’s and Fanatics. The firms just cut a deal to jointly sell rare cards.

• 3 – Where Vancouver ranked in a recent study of the most unaffordable housing markets in the world. Toronto also made an appearance on the rankings, taking the 11 spot.