According to data compiled by Ratehub.ca, the spring buying season is the best time of year to get a competitive rate from A lenders.
The data suggests the most aggressive five-year fixed rate lenders offered between January and March 2016 was 2.39%, while the variable averaged 2.09%. However, those rates dropped to 2.33% and 2.04%, respectively, between April and July.
By 2018, when interest rates began climbing, lenders promoted lower-rate deals. The average five-year fixed rate rose to 3.07% between January and March—although lenders did slash them—and the variable rate declined from 2.17% to 1.96%.
“It seems to us—and our data supports this—that during the spring time is when lenders usually get the most aggressive with rates,” said James Laird, Ratehub co-founder. “There are obviously other factors at play, but all else being equal, lenders offer the most deals during spring home buying season. We definitely saw more dips during the spring.”
That’s good news for borrowers in a rising rate environment. While rate hikes have ceased, however temporally, the Bank of Canada is determined to establish an upward trajectory.
Laird suggests that consumers with mortgage flexibilit, adopt the seasonality approach when shopping for the best interest rate.
“During this period, many lenders will choose at least one rate and term to price very aggressively in order to attract attention to all of their mortgage products,” continued Laird. “Lenders also come out with special promotional offers to incentivize borrowers to lock in a rate. Consumers can expect to see cash-back deals to help with closing costs and refinance fees. Some lenders offer extra-long rate holds during this period. For example: BMO is currently offering a 130-day rate hold. The ’30-day quick close rate’ is another promotion many lenders opt for—this is a discounted rate that applies if your mortgage is closing in the next 30 to 45 days.”
A major reason lenders become so competitive during the spring season is to hit their annual mortgage volume targets, which they often hit during the second quarter of the year. When that happens, rates subsequently become less competitive.
“Consumers will typically see rates fall again in October,” said Laird. “All of Canada’s major domestic private banks end their fiscal year on October 31. Lenders that want to get an early start on their targets for the next year will come out with their promotions during this time period.”