Newest in Mortgage Information: Huge Banks Reducing their 5-year Fastened Charges
RBC Royal Bank was the third Big 6 bank to cut its 5-year fixed-rate mortgage rate over the weekend.
According to data from RateSpy.com, the bank cut its 5-year uninsured rate by 25 basis points to 2.19%.
The move came days after similar cuts by CIBC and TD Bank last week.
On Friday, CIBC cut its rates by 5 basis points, raising the uninsured 5-year fixed rate on special offers to 2.39% and the 5-year variable rate to 1.35%.
TD Bank was the first of the banks to cut theirs on Thursday. TD’s moves were more significant, lowering rates 45 basis points. This brings its insured (high quota) 5-year strength to 1.89% (from 2.34%) and the uninsured 5-year strength to 1.99% (from 2.44%).
The moves follow a downtrend in bond yields over the past few months. The 5-year bond yield has fallen from 1.01% in June / July to a range between 0.80% and 0.90% since August. Bond yields usually lead to the fixed mortgage rates.
September 21 update
Further rate cuts were made Tuesday by CIBC and HSBC Canada.
CIBC further lowered its 5-year uninsured discount rate, lowering it an additional 15 basis points to 2.24%. It also hacked insured 5-year fixing by 38 basis points to 1.99%.
HSBC Canada also cut several of its announced 5-year fixed rates. The bank reduced its insured 5-year time deposits by 10 basis points to 1.89% and its uninsured 5-year time deposits by 5 basis points to 2.19%.
According to CMHC, new homes will be slowed down in August
All eyes are currently on the supply of apartments in view of the historically low inventory level, which is finding it difficult to meet the current strong demand.
For this reason, the latest construction start numbers released this week were important as they serve as a rough indicator of future supply.
Overall, seasonally adjusted home starts fell to 260,239 units in August, down from 270,744 in July, the Canada Mortgage and Housing Corporation (CMHC) reported.
The annual rate of city start-ups declined by 4.7%, led by a 5.7% drop in start-ups for apartments, condominiums and other apartment buildings. Single-family homes in cities were down 2% year-on-year.
Despite the decline, the launches are still well above the long-term average.
“In trend and monthly SAAR [seasonally adjusted annual rates] On the basis of the historical comparison, the level of launch activity remains high, ”said CMHC. “Among Montreal, Toronto and Vancouver, Toronto was the only market that saw growth in total SAAR launches in August due to modest growth in the multi-family segment.”
Neo Financial is expanding into mortgages
A fintech company that calls itself a “disruptive online bank” is widely expected to add mortgages to its product offering.
Neo Financial Technologies, based in Calgary, started a year ago with a fee-free Mastercard and a high-interest savings account. Since then, it has expanded nationwide and has more than 4,000 retail partners with whom its cardholders can earn cashback.
The company has just completed a second round of $ 64 million fundraising, bringing the total funds raised by the company since its inception to $ 114 million.
It is widely expected that the next stages of the company’s expansion will include mortgages to challenge the traditional big banks and capture a growing share of that market share.
“With 90% of Canada’s market share owned by the Big Five banks, Neo was designed to give Canadians what they’ve been missing: choice and innovation,” it says on its website.
In a job posting for a position as Head of Mortgages, the company said: “Neo is adding innovative mortgage products to our range of products that are supported by state-of-the-art technology. You will be instrumental in scaling our mortgage business to a household brand “in Canada.”
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