Canadian mortgage rates are beginning to inch higher for the first time since before the COVID-19 crisis, reflecting the spike in long-term bond yields, but with home loans still languishing around historically low levels the modest hike is unlikely to slow the red-hot housing market.
The lowest rate for a Canadian five-year fixed rate mortgage, the most common mortgage in Canada, climbed by 25 basis points last week to 1.64 per cent, according to Ratehub.ca. It was the first increase since January 2020. The move could encourage buyers to lock in historically low borrowing costs before they rise further.
The low mortgage rates, pent-up demand and fewer listings amid the pandemic have lit a fire under the Canadian housing market. More than 550,000 homes, a record, traded hands in 2020, according to the Canadian Real Estate Association, with its Home Price Index rising at an annual rate of 13.5 per cent in January.
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