Record low mortgage rates will run to 2022
August 21, 2020
Bank of Canada Governor Tiff Macklem. | Bank of Canada
‘Lower for longer’ is the new mantra from Canada’s banking industry.
Record low mortgage rates will continue for at least two years, according to the Bank of Canada (BoC). On August 14, BoC chopped the qualifying rate for the mortgage stress test for the second time this year.
BoC also lowered its five-year conventional mortgage rate from 4.94 per cent to 4.79 per cent, the second rate cut since May.
The reduction lowers the qualifying rate under the mortgage stress test—which all buyers must qualify for—but is far above actual lending rates that have plunged to among the lowest levels in Canadian history.
HSBC Canada, Canada’s seventh largest bank, was offering a five-year fixed rate of 1.89 per cent as of August 14, available for 120 days.
The lowest five-year rates from Canada’s big six banks as of August 14 were 2.19 per cent at Royal Bank, Scotiabank and CIBC, according to RateSpy.
Mortgage brokers are offering even lower rates with Toronto-based Butler Mortgage dangling a 1.66 per cent five-year fixed-rate on mortgages of at least $300,000 with as little as 5 per cent down.
BoC confirms lending rates will remain low for a long time.
New BoC Governor, Tiff Macklem, said in an August 14 press conference that what he wants Canadians to take away from these rate cut actions is "Canadian interest rates are very low and will remain very low for a very long period." Macklem told reporters BoC will not raise rates until inflation hits its 2 per cent target on a sustainable basis , which he estimates this will take at least two years.