The COVID-19 coronavirus has caused financial markets to move money from the stock and commodities markets into bonds which has moved bond yields downward. Therefore, the 5-year mortgage rate that is closely tied to Canada’s 5-year Benchmark Bond Yield, has put downward pressure on mortgage rates. As a result, 5-year “insured” mortgage rates are now hovering around the 2.59% rate territory. This was similar to mortgage rates back in August of 2019 when the Benchmark Bond Yield was 1.13%, nearly identical to today.
Despite the terrible circumstances this virus has inflicted on the world directly and indirectly, for now, this roughly 50 basis point (1/2%) reduction in the 5-year insured rate reduces a mortgage payment $25.42 for every $100,000 in mortgage debt. A $500,000 mortgage would therefore have $127.07 less mortgage payment per month than was recently the case. Needless to say, this is a perfect time to lock-in a rate for those considering a purchase or refinance (Note: refinance rates are slightly higher).