Sal Guatieri at BMO Capital Markets described the macro picture in January: “with rates now at the low end of neutral and inflation still moderately above target, the easing cycle is probably over.” The Bank of Canada held again in June — fifth time running. RBC Economics isn’t expecting hikes before 2027, but the bond market path — and with it, five-year fixed pricing — stays highly sensitive to what happens next in the Middle East and with inflation.
A client exercise worth doing
The Statistics Canada data makes a specific exercise possible that brokers can actually use. Take a client’s current rate — based on when they originated and what term they chose — and map it against where the market sits now.
A client who took an uninsured five-year fixed in April 2024 locked in at around 5.30 per cent. If they’re renewing today, or approaching maturity, the best available uninsured three-to-five-year fix is 3.89 per cent. That’s 141 basis points. On a $500,000 mortgage, that’s about $400 less per month.
A client who went insured variable in April 2024 at 6.97 per cent and held it through the cutting cycle is now at 3.79 per cent. Their payments have already fallen by over $1,000 per month on a comparable balance. They might be wondering whether to lock in now. The data suggests the floor on variable is close, and the five-year fixed has barely moved in a year. Whether to lock in — and at which term — isn’t a question the data answers. But it’s the question the data makes urgent.
The odd thing happening at the short end
There’s one more wrinkle worth flagging. The insured one-to-three-year fixed currently sits at 4.63 per cent. The insured five-year-and-over fixed is at 3.97 per cent. That means the shorter term is actually more expensive than the longer one — the opposite of the normal relationship.