Dip in inflation could herald declining mortgage rates as busy spring season approaches
Robert McLister: There’s a fair chance mortgage rates could dive further this spring
Fans of low mortgage rates got what they wanted this week as inflation fell back into the two per cent range (2.9 per cent), well below Bay Street’s estimates.
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That averted further fixed-rate increases, which, frankly, have been surprisingly few and far between — despite a hefty jump in bond yields. Fixed mortgage rates tend to shadow government bond yields because lenders use yields as benchmarks when setting mortgage pricing.
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The big question
We’re just a week away from March, which is like the big league opener for Canada’s housing market. It’s a month when homebuyer and mortgage activity almost always ramp higher.
The question for prospective homebuyers is, will rates dive further this spring, colluding with unprecedented population growth and tight housing inventories to lift home prices? There’s a fair chance they will.
As of this week, all leading nationally advertised mortgage rates stayed put. As always, keep an eye on the five-year yield for hints of rate direction.
Looking further out, the bond market is implying a roughly two percentage point drop in Canada’s benchmark prime rate over the next 36 months. That’s according to the forward rate outlook, as tracked by CanDeal DNA.
With inflation behaving better and hinting that rates have crested, the best values for most qualified borrowers remain in the three-year fixed and variable segments.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news . You can follow him on X at @RobMcLister.
