Customers cushioned from widespread increases – for now
Canada’s most competitive lenders have held back on rate hikes in a bid to remain attractive to customers, new analysis has found.
Financial Post columnist Robert McLister said a recent uptick in economic activity has brought increased inflation expectations, consequently leading to higher yields that have posed challenges for funding mortgages.
This would typically necessitate an uptick in rates, McLister noted, but some of the market’s most competitive lenders have chosen to hold off on increasing their rates in order to attract and retain customers.
He said this “voracious” competition among mortgage lenders has so far cushioned consumers from feeling the impact of widespread rates hikes.
Last week, the leading national advertised rates only saw two changes. The lowest three- and four-year fixed rates came from Scotiabank’s eHome online platform, down just one and six basis points, respectively.
But McLister did warn that things may change once the latest Consumer Price Index (CPI) is released on Tuesday, stating that future rate changes would depend on whether inflation shows some headway from the 3.4% year-over-year increase seen in December.
If the CPI doesn’t show improvement in the upcoming report, the bond market could push fixed-mortgage rates higher, according to McLister.
Mortgage cost was identified as the single largest contributor to higher inflation in December. According to Statistics Canada, the surging cost of servicing a mortgage accounted for 28.6% of the 12-month change to the CPI.
What are your thoughts on this story? Feel free to share your comments below.
