As bond yields continue to climb, the last nationally advertised five-year fixed mortgage rates below four percent have disappeared this week. Borrowers seeking sub-4% fixed rates now have limited options, with only a handful of regional providers still offering rates in the high threes.
Regional Lenders Hold On, But Fading Fast
Among the remaining lenders, Butler Mortgage serves Alberta, British Columbia, and Ontario, while RateBuzz operates in Ontario. However, these offerings are quickly vanishing as market conditions tighten.
Variable Rates Draw More Interest
Variable-rate mortgages are currently attracting more demand than five-year fixed rates, with most still sitting comfortably below four percent. The key question is how long they will remain at these levels.
Markets currently price in just one Bank of Canada rate hike this year, but analysts warn that rising oil prices and stubborn inflation pose significant risks. Bond yields have been closely tracking oil costs, and expensive crude could keep upward pressure on rates.
Inflation Expectations on the Rise
The Bank of Canada's latest business outlook survey revealed that respondents' two-year inflation expectations jumped 60 basis points to 3.40 percent, well above the central bank's target. If medium-term inflation outlooks become de-anchored, fixed-rate borrowers who locked in now may benefit.
Robert McLister, a mortgage strategist and editor of MortgageLogic.news, notes that if markets are underestimating inflation risk, those who secured fixed rates will have reason to celebrate.
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