Canadian banks on brink of mortgage price war
Canada’s major banks are heading into a renewed mortgage price war in the wake of the Bank of Canada’s surprise decision to cut interest rates.
With one of Canada's biggest mortgage lenders dropping their qualifying 5 year mortgage rate to 2.84% this weekend, smaller, non-bank lenders have also started dropping theirs as well, offering even lower rates to clients.
Some other major banks like the Bank of Nova Scotia & National Bank have followed suit and have adjusted their products to reflect this recent Bank of Canada rate drop.
A battle in the mortgage market seemed inevitable given that the Government of Canada bond yields have plummeted in recent weeks. Mortgage Brokers have been predicting that falling bond yields were going to drive down rates ahead of the ultra-competitive spring housing market. Brokers are expecting more cuts from all lenders.
The renewed price war is raising concerns from economists that this will add fuel to the country's overheated housing market as Canadians continue to struggle with record high household debt. It is becoming increasingly difficult for new home buyers to begin entering the market due to sky high home prices in some of Canada's major cities, even with rates being at record lows.