It’s a turbulent, but opportune, time for homebuyers as home sales drop nationally – particularly in Vancouver and Toronto, where introduction of the Harmonized Sales Tax on July 1st spurred home sales in the first half of the year.
With mortgage lenders forced to become even more competitive, and with banks dropping longer-term mortgage rates in response to falling interest rates in the bond market, well-resourced mortgage brokers can help purchasers find affordable mortgages to finance properties that are being sold into a buyer’s market.
CTV News reports that, “One day after a report showed Canadian housing sales were down 30 per cent, most major banks announced they were cutting mortgage rates.” Major banks (with the exception of TD and National Bank, who are likely to follow) cut their mortgages rates by 0.1% on Monday, bringing the rate for a five-year closed rate mortgage down to 5.49%, while one-year closed rate mortgages holding steady at 3.30%.
“The bond market is where banks finance their mortgages,” the BNN’s, Michael Kane, told CTV’s Canada AM, “so with bond prices going up and bond yields or the interest rates they pay going down, that creates easing conditions so the charter banks can give you a bit of a break.”
Of course, non-bank lenders are also being affected by falling rates in the bond market, meaning that mortgage brokers with access to broad networks of bank and non-bank lenders will be able to access even lower mortgage rates for qualified purchasers.
With the major banks easing rates for longer-termed fixed rate mortgages, the next significant announcement affecting Canadian mortgage markets will be on September 8th, when the Bank of Canada governors convene to review their market-setting overnight lending rate.
