‘Mortgage rate at 100-year low’ as variable offered at 0.99 per cent

A sub-1 per cent mortgage – lowest ever – further evidence that rock-bottom lending could remain until 2024, analysts say

Western Investor
December 7, 2020

| Getty Imagea
— Historic low lending rates could stay for years.| Getty

Canadian lending rates were already at 100-year lows before HSBC bank offered a 0.99 per cent variable-rate mortgage December 4, the lowest level ever seen in Canada.

Canada’s Finance Minister Chrystia Freeland confirmed via virtual Zoom meeting with the Greater Vancouver Board of Trade (GVBOT) December 2 that lending rates are a major reason for the confidence.

When questioned by the GVBOT moderator on Ottawa’s multibillion-dollar income and rent relief support during the pandemic, the finance minister said, “One of the reasons we can afford to do this is because interest rates are so low right now. It is at a 100-year low. You heard me right.”

On December 4, 2020, HSBC Canada underscored this when it launched the lowest mortgage rate in Canadian history: 0.99 per cent.

“This is a milestone rate, akin to landmark rates like BMO’s 2.99 per cent 5-year fixed in 2012 and Meridian Credit Union’s 1.49 per cent fixed in 2015,” according to RateSpy.

HSBC’s five-year variable rate offer is for buyers with insured high-ratio mortgages, with a discount equivalent to prime minus 1.46 per cent, considered the deepest discount ever offered.

Home builders and developers should also find lenders are more welcoming in the months ahead.

In the 2020 Canadian Real Estate Lenders’ Report released December 1 by CBRE Limited, 57 per cent of lenders said they would increase or maintain lending to the residential condominium construction market, while 23 per cent planned to increase lending for single-family home building and 14 per cent planned to maintain their current spending for single-family home building.

As well, 60 per cent of lenders said they would consider an increase in financing for multi-family rental housing in 2021.

Low mortgage rates could remain in effect for three years.

The Bank of Canada kept its benchmark overnight lending rate at 0.25 per cent at the latest setting, and suggested the economy would not fully recover until 2023.

National Bank, in a December 2 statement, said it “wouldn’t be surprised if the overnight rate remained at 0.25 per cent into 2024 as well.”

Tony Stillo, director of economics (Canada) at Oxford Economics, stated, “we expect the [Bank of Canada] policy rate to remain at 0.25 per cent until early 2024 before a gradual tightening begins,” according to Mortgage Broker News.


Frank O'Brien is the editor of Western Canada's biggest commercial real estate newspaper, Western Investor, as well as a contributing editor at West Coast Condominium, real estate contributor to Business in Vancouver and a regular media commentator on real estate investment.
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