Record-low mortgages are by-products of the spring season

by Ephraim Vecina12 Jun 2019

At present, Canadians can access a wide selection of mortgage products with rates below 3%, largely due to the tail end of the spring season.

Standard five-year fixed-rate mortgages are now going as low as 2.64%, and even higher-risk consumers can readily access loans at 2.89%. These are the lowest levels seen since summer 2017, according to James Laird of CanWise Financial.

Laird noted that the current months are a major factor in the trend, as this part of the year is when families prefer to move and establish new roots before the new school term begins.

“Promotions are April, May and June … when all mortgage companies try to make sure they are on track to hit their annual targets,” Laird told CBC News. “Anyone who’s behind at this point would be aggressive with the margins they’re willing to fund mortgages at right now.”

“The hard cost of funding these loans is going down,” he added. “And at the same time we are at the tail end of the most competitive market, when lenders fight for [business], so that’s when they are willing to thin out their margins a bit to attract volume.”

Earlier this month, Cormark Securities analyst Meny Grauman reported that the country’s largest banks benefited from “better than expected” mortgage activity during the second quarter, despite slower domestic volume.

“[The Big Six] did OK,” Grauman said, but quickly clarified that these were “not spectacular results. And there were definitely enough black marks in the results to continue to fuel questions about just how strong performance is going to be heading into the future.”

Institutions with international businesses helped offset B-20’s significant negative impact on Canadian loan growth, Grauman added.

Overall profits in the largest banks were at approximately $12 billion during Q2 2019. Net income was estimated to have grown around 7% annually, and around 5% on an adjusted basis.

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