Canada could soon see lowest 5-year fixed rates in 2 years

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Millicent Wong
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Canada's central bank just threw borrowers another bone, cutting interest rates by a quarter of a percentage point. This brought the benchmark interest rate in Canada down to 6.45 percent, directly benefiting variable rate borrowers.

Leading variable interest rates are currently as low as 5.15 percent (with insured default) from providers such as Nesto. If your mortgage is uninsured, you will have to pay at least 45 basis points more (5.60 percent).

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As for home equity lines of credit, they now start with a “6” again. A number of lenders have lowered HELOC rates to 6.95 percent, but you may be able to negotiate even less if you have excellent qualifications.

The same forces pushing the Bank of Canada to cut interest rates are also working to the benefit of fixed-rate borrowers. Fixed-rate borrowers are measured by bond market yields, which are currently falling faster than the Liberal government's hopes of re-election.

A popular measure of the price lenders pay for mortgage loans is the yield on five-year Canadian government bonds. As of this writing, the yield has fallen to a 17-month low.

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  2. The CEO of Royal Bank said the bank's mortgage business was now generating only a third of its previous revenue.

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As a result, we're probably not far from seeing 3.99 percent fixed five-year rates for the first time in over two years – at least on the insured variety. That's a welcome departure from the high of 5.54 percent we saw this time last year.

Robert McLister is a mortgage strategist, rates analyst, and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.

Want to know more about the mortgage market? Read Robert McLister's new weekly column in the Financial Post and find out the latest trends and details on financing opportunities you can't miss.

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Mortgage interest rates

The rates shown below are updated by the end of each day and are taken from the Canadian Mortgage Rate Survey by MortgageLogic.news. Postmedia and Imaginative. Online Inc., the parent company of MortgageLogic.news, receive compensation from certain mortgage providers when you click on their links in the charts.

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