Falling mortgage rates sustain sales recovery
June 12, 2019
The spring uptick in Canadian housing sales could be sustained by rates on a standard five-year fixed-rate mortgage that have fallen to their lowest level since spring of 2017, according to Ratehub, an online rate comparison site.
Lenders are offering five-year rates below 3 per cent, noted James Laird. president of mortgage broker CanWise Financial.
CanWise and True North Mortgage—among other brokers—are writing five-year fixed rates as low as 2.64 per cent for certain buyers. Even higher-risk borrowers can easily find a loan for 2.89 per cent, according to a June 7 survey by Home BUILDER.
CIBC is offering five-year closed-rate mortgages at 3.34 per cent and BMO was at 3.29 per cent for the best borrowers, based on RateSupermarket.ca site comparisons on June 7. These rates were also available on 90-day rate holds for prospective homebuyers.
The spring homebuying season traditionally sees lenders competing for business, which can lead to lower lending rates, Laird noted.
This year the lower mortgage rates dovetail with an increase in housing sales that began in April—which cheaper mortgage money could accelerate.
The Canadian Real Estate Association reports that housing sales rose by 3.6 per cent in April 2019 from a month earlier. After having dropped to the lowest level since 2012 in February, the rebound over the past two months left sales slightly below readings over the second half of 2018.
In May, however, the Greater Toronto Area (GTA) housing market posted robust double-digit growth in sales recorded for the second month in a row. A total of 9,989 homes traded hands—up 18.9 per cent from the same time period in 2018 and an increase of nearly10 per cent from April 2019.
While GTA sales remain below the 10-year average, the uptick in transactions could indicate the policy-induced correction that has plagued the market over the last two years could be coming to a close, according to the Toronto Real Estate Board.