There’s growing consensus the global economy and its effect on bond yields will put an end to the latest rate war – even before it really begins.
A panel of mortgage brokers and economists, convened by a rate comparison website, argues any downward pressure on fixed mortgage rates will ease early this month. The timing has everything to do with an “increasingly poor global economic performance and consistently low Government of Canada bond yields.”
The assessment means lenders, which set their fixed mortgage rates based on those yields, will have little room to lower rates without cutting margins uncomfortably thin. An already slowing real estate market has further eroded any incentive to slash rates, with all A-lenders anticipating a significant dip in funded volumes for the remainder of 2012.
Any hold on rate dropping would likely benefit brokers and stave off the kind of wholesale buy-downs an increasing number of mortgage professionals have already resorted to.
Still, it could also have the opposite effect, with brokers having to bear the brunt of any rate cutting needed to keep clients from going to the banks.
While banks have kept their posted five-year fixed rates well about 2.99 per cent, almost all are prepared to match it at the branch level, said James Laird at True North Mortgage.
“We’ve had several people come in with their branch having offered that rate once we offered it to them,” he told MortgageBrokerNews.ca last week.