United States Federal Reserve chair Jerome Powell provided some optimism for the mortgage rate market this week. Despite strong economic numbers, Powell stated that it is unlikely that the next policy rate move will be a hike. As a result, government yields decreased across the board, which is positive news for fixed rates in the short term due to the connection between mortgage funding costs and bond yields.
Toronto-Dominion Bank made headlines by slashing its uninsured variable rate to 6.19 per cent in an effort to expand its mortgage business. This rate is significantly lower than the nearest comparable nationally-advertised variable rate and is the best widely available uninsured discount since 2021. This move by TD Bank can be likened to a mic drop in the financial world.
Based on the bond market’s forward rate outlook, a 6.19 per cent variable rate is a competitive option compared to Canada’s leading fixed rates. While three-year fixed rates may project lower hypothetical borrowing costs on paper, it ultimately depends on the accuracy of the bond market’s predictions.
In other mortgage news, four-year fixed rates saw a slight increase of five basis points. While this may not make headlines, it is worth noting.
As the week comes to a close, it is advisable to keep an eye on yields following Friday’s U.S. employment report. Depending on the strength of the report, bond markets could push rates higher or lower.
Robert McLister, a mortgage strategist and interest rate analyst, provides insights on the mortgage market. His new weekly column in the Financial Post covers the latest trends and financing opportunities. Stay informed by bookmarking financialpost.com and signing up for newsletters to support quality journalism.