November saw only two best rate changes, compared to the 62 adjustments from January to October
On the tail-end of a turbulent year, Canadian mortgage rates seem to have established a semblance of stability in November, according to a new analysis by nesto.
Following the trend established in October, nesto said that volatility remained relatively low while rates kept declining.
“With only two best rate changes in the whole month, mortgage rates seem to have gained in stability,” the digital brokerage reported. “For the first time since nesto’s inception, our best fixed rate was lower than our best variable, by 0.01%.”
To put this into perspective, the January-November stretch saw a total of 64 rate changes, for an average of 5.82 rate changes per month.
nesto found that the highest insurable variable rate in November was 2.75% while the lowest was 1.50%, amounting to a 1.25% difference. Fixed and variable rates for insured or insurable products only had a variation of 0.04-0.09%.
“Noteworthy about this spread is that often, a borrower would choose a variable rate primarily for the mortgage freedom associated with the smaller break penalty compared to a fixed rate, with the historically lower variable rate being icing on the top of the reduced penalty exposure,” nesto said. “But with the rates so close together, one can no longer add ‘immediate interest savings’ to the [advantages] of selecting a variable rate.”
At present, most of nesto’s borrowers who are going for variable rates do so “with the assumption that there is a fair chance that they will need to break their mortgage within 5 years,” the brokerage reported.
HSBC’s recently reported record-low offering is also likely to be the exception rather than the norm, nesto said.
“Looking back to 2018 and 2019, we would see end-of-the-year specials at this time of the season from one or multiple lenders,” nesto said. “However, likely related to currently record low rates and the fact that 2020 was a unique, difficult and exhausting year for many in the industry, we have not seen any of our lending partners produce a similar newsworthy special, yet.”
