Mortgage Market Update - March 31, 2025
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YouTube Privacy PolicyMortgage Market Update - March 31, 2025
Key Market Rates:
Prime Rate: 4.95% ➡️
BoC Policy Rate: 2.75% ➡️
Next BoC Meeting: April 16, 2025
5-Year Bond Yield: 2.635% ⬇️
Bank of Canada Announcement (April 16th):
Market expectations currently lean towards no change in the interest rate.
As of last Friday, there's a 36% probability of a rate cut and a 64% probability of no change.
We'll monitor updates throughout the week leading up to the announcement.
Tariff Pause/Implementation (April 2nd):
The tariff pause is scheduled to end, or new tariffs may be implemented.
This event is expected to cause market shifts.
Monitoring how this event impacts the market.
US Inflation and Expectations:
Inflation is rising in the US, and inflation expectations are increasing.
This could potentially lead to upward pressure on interest rates.
Monitoring how US inflation impacts Canadian rates.
Current Interest Rate Overview:
Current interest rates are at multi-year lows.
Insured 5-year variable rates are around 4% (prime minus 90 basis points).
Insured 5-year fixed rates are below 4%, and 3-year fixed rates are around 4%.
Uninsured 5 year fixed and 3 year fixed are also in the low 4% range.
Home equity lines of credit (HELOCs) are generally prime plus 0.5%.
Qualifying Rate Impact:
The qualifying rate has significantly decreased, increasing borrowing power.
This means individuals can qualify for larger mortgages with the same income compared to previous years.
Potential for increased market activity due to improved affordability.
Market Activity:
April is typically an active month for home purchases.
We'll observe if lower interest rates stimulate increased market activity.
Bond Yields:
Bond yields have shown volatility in recent weeks.
Current yields are around 2.645%, slightly lower than last week.
Yields are expected to fluctuate based on upcoming tariff and inflation data.
Strategic Considerations:
A variable-rate mortgage offers flexibility to lock in a fixed rate if fixed rates rise later in the year.
Market expectations suggest potential short-term rate improvements, but possible mid-to-long-term upward pressure.
Refinancing Opportunities:
Some big banks have not significantly reduced their posted rates, making refinancing potentially economical.
Switching from a higher fixed rate to a lower fixed rate can result in substantial interest savings.
Three month interest penalties can be low at some big banks.
If you have any questions about the current market, interest rates, or your mortgage options, don’t hesitate to reach out. I’m happy to help!
Best,
Matt Parker