BANK OF CANADA HOLDS AT 2.25%, BUT FIXED RATE PRICING IS DRIFTING
The Bank of Canada held its overnight rate at 2.25% on July 15, the sixth consecutive hold since the cutting cycle ended last October. Prime rate stays at 4.45%. The decision was widely expected. Annual inflation reached 3.2% in May, above the Bank’s comfort zone, driven mostly by higher gas prices tied to the conflict in the Middle East. The Bank is treating that as a temporary pressure rather than a reason to move.
What’s changed is on the fixed rate side. Government bond yields, which are what lenders use to price fixed mortgages, have edged higher over the past few weeks on the same oil price story that’s been driving inflation. That’s a separate mechanism from the Bank’s policy rate, and it moves independently.
What this means for your mortgage: if you’re on a variable rate or a HELOC, nothing changes this week, since variable and HELOC rates track prime. If you’re shopping a fixed rate or coming up on a renewal, the pricing environment has gotten slightly less favourable than earlier this year. Worth a conversation before you lock anything in.
TORONTO MORTGAGE ARREARS CLIMB AS ONTARIO OVERTAKES THE NATIONAL AVERAGE
Mortgage arrears across Canada have climbed to 0.28% of all outstanding mortgages, up from a pandemic-era low of 0.14%. Ontario’s delinquency rate has now overtaken the national average for the first time in more than a decade. In Toronto specifically, the rate climbed from 0.15% to 0.24% year over year, an increase of roughly 60%.
The context matters here. Most borrowers who locked in ultra-low rates back in 2020 and 2021 have already gone through their renewal. Economists tracking this data point out that the sharpest part of the payment shock may already be behind us rather than still ahead.
What this means for your mortgage: if you’re coming up on a renewal and you’re worried about your number, this is exactly the kind of situation where getting ahead of it, rather than waiting for the renewal letter, makes a real difference.
ONTARIO’S HST REBATE IS PULLING BUYERS BACK INTO TORONTO NEW BUILDS
Ontario’s removal of the 13% HST on new homes, worth up to $130,000 on homes up to $1.5 million, is starting to show up in new home buyer interest across the GTA, particularly for buyers who previously wouldn’t have qualified for the rebate because their new home was priced over $1 million.
Brokers are noting a pickup in interest, particularly toward pre-construction, since it stretches out the time buyers have to save their down payment while locking in today’s price.
What this means for your mortgage: if a new build is on your radar, the rebate changes the cash you need at closing, which can change what you qualify for and when you should start the mortgage conversation.
WHERE THINGS STAND
Variable rate holders, nothing changes this week. If you’re renewing soon, plan early. If a new build is on your radar, it’s worth running the numbers. And if you renewed in 2023 or 2024 at a higher rate, today’s environment makes refinancing worth a second look.
Call or text 249-480-1249. HumberBayMortgages.ca.
Simon Browning | Mortgage Agent Level 2 | BRX Mortgage 13463
Sources: Bank of Canada, Canadian Mortgage Professional, Desjardins Economic Studies