{"id":13088,"date":"2019-07-17T10:10:09","date_gmt":"2019-07-17T17:10:09","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=13088"},"modified":"2019-07-02T12:29:58","modified_gmt":"2019-07-02T19:29:58","slug":"the-sub-3-five-year-fixed-mortgage-is-back","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2019\/07\/the-sub-3-five-year-fixed-mortgage-is-back\/","title":{"rendered":"The Sub -3% Five-Year Fixed Mortgage is Back"},"content":{"rendered":"<p style=\"text-align: justify;\">Around 18 months of steady overnight rate rises have led mortgage holders and applicants to brace themselves for bigger monthly payments. But five-year fixed rates, held by 80% of homeowners, are in fact declining because of a fall in government bond yields, which dicatate fixed rates, according to the BC Real Estate Association.<\/p>\n<p style=\"text-align: justify;\">In its latest quarterly Mortgage Rate Forecast, issued June 28, the BCREA reported that the average five-year fixed rate for 2019\u2019s second quarter will have been 2.99%, down from Q1\u2019s 3.60%. That rate is expected to stay the same through summer to September, and the declines are even steeper than those predicted in BCREA\u2019s March forecast.<\/p>\n<p style=\"text-align: justify;\">However, the association is predicting that five-year fixed-rate mortgages will begin to climb \u201cmodestly\u201d again in the fall, with an average of 3.14% in 2019\u2019s fourth quarter, and the same in the first six months of 2020.<\/p>\n<p style=\"text-align: justify;\">Despite this, the Bank of Canada\u2019s five-year posted (qualifying) rate is expected to remain unchanged all the way through to the end of next year, at 5.34%. This means that mortgage applicants undergoing the stress test will have to qualify at that rate, even if they are only paying around 3% as a contracted rate.<\/p>\n<p>\u00a0\u00a0\u00a0 <a href=\"https:\/\/www.roryc.ca\/blog\/?attachment_id=13089\" rel=\"attachment wp-att-13089\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone  wp-image-13089\" src=\"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2019\/07\/BCREA-288x203.jpg\" alt=\"\" width=\"606\" height=\"427\" srcset=\"https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2019\/07\/BCREA-288x203.jpg 288w, https:\/\/www.roryc.ca\/blog\/wp-content\/uploads\/2019\/07\/BCREA.jpg 750w\" sizes=\"auto, (max-width: 606px) 100vw, 606px\" \/><\/a><\/p>\n<p style=\"text-align: justify;\">The BCREA\u2019s report said, \u201cAs currently constituted, the mortgage stress test is the higher of the contract rate plus two per cent or the posted five-year mortgage rate. The latter has not changed in close to a year despite the drop in five-year bond yields. In fact, the posted rate appears to be divorced from its prior statistical relationship with the five-year bond yield.\u201d<\/p>\n<p style=\"text-align: justify;\">The association reiterated its many previous calls for the federal government to ease the mortgage stress test. It wrote in the report, \u201cOur models imply that the five-year posted rate should be 4.84%, rather than the current 5.34%. Not only would a lower posted rate help insured buyers to qualify, but it would provide a significant boost to the uninsured market through a lower stress test rate.\u201d<\/p>\n<p style=\"text-align: justify;\">The association also suggested a cut to the Bank of Canada\u2019s overnight rate \u2013 which affects variable-rate mortgages \u2013 could be on the cards.<\/p>\n<p style=\"text-align: justify;\">The report said, \u201cWith market expectations at odds with communication from the Bank of Canada, its worth asking, \u2018Is it time for the Bank of Canada to cut interest rates?\u2019 The argument in favour of lower rates is a growing risk of recession, caused by an exogenous shock like the escalation of global trade disputes, when the Bank has limited ammunition to boost the economy.\u201d<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/biv.com\/article\/2019\/07\/sub-3-five-year-fixed-mortgage-back-now-bcrea-forecast\" target=\"_blank\" rel=\"noopener noreferrer\">BCREA Forecast : The Sub -3% Five-Year Fixed Mortgage is Back &#8211; For Now<\/a> by Joannah Connolly | Glacier Media Real Estate Business in Vancouver<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Around 18 months of steady overnight rate rises have led mortgage holders and applicants to brace themselves for bigger monthly payments. But five-year fixed rates, held by 80% of homeowners, &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2019\/07\/the-sub-3-five-year-fixed-mortgage-is-back\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-13088","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Sub -3% Five-Year Fixed Mortgage is Back &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2019\/07\/the-sub-3-five-year-fixed-mortgage-is-back\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"The Sub -3% Five-Year Fixed Mortgage is Back &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Around 18 months of steady overnight rate rises have led mortgage holders and applicants to brace themselves for bigger monthly payments. 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