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%, 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.
Mortgage rates had been trending lower in Canada since the Bank of Canada slashed its benchmark interest rate last March to a record low of 0.25% to support the economy during the pandemic. So the move-up in mortgage rates is a sea change for home buyers, providing a sense that a bottom could be in place.