5-year fixed rates break 2.00% barricade

That exactly was the assertion being made by some economists in 2015. And then the market did what market likes to do time and again, humble and mystify those who try to predict it. The only certain thing about market is its uncertainty.

Recently IntelliMortage became the first-ever mortgage service provider in Canada, as per records by RateSpy.com, with a 5 year fixedrate less than 2.00%. It is a rate that few would’ve anticipated at the swirl of this decade. It is even down under the most variable rates.

Five-fixeds have now nosedived just about 20 points from their 1981-pinnacle, and the bottom might just still be below us. Two percent is a significant psychological threshold and probably much more effective than even the 3-percent level, which was infringed back in 2011. In reality, it may well be the last marquis barricade that five-years shattered, leaving the unimaginable: sub-1% rates. 

For real estate, there could be some serious implications for buck-ninety-nine 5-year fixed rates. With just about half of Canadian borrowers going with 5-year fixed mortgage, as per stats by Mortgage Professionals Canada, sub-2% rates could draw an all-new segment of mortgage buyers from the closet and onto the housing market podium!

However, that will take many more lenders at this point than mere one. In addition, this 1.99% rate is, at present, limited to only insured mortgages of over $250,000.

If you are in wait for leading banks to fall under 2 per cent on 5-year money, we wouldn’t call it quit just yet. Major Banks are holding firm at 2.59% (as advertized) and around 2.44% (discretionary). That’s a real long ride to 1.99 per cent, particularly for banks mulling over protecting their profits from a dead yield curve and dwindling net interest margins.