United States Federal Reserve chair Jerome Powell gave the mortgage rate market hope this week. Despite robust U.S. economic numbers, it’s “unlikely that the next policy rate move will be a hike,” he told reporters Wednesday.
Government yields took the hint, diving lower across the board. That’s good news for fixed rates in the short term, given the linkage between mortgage funding costs and bond yields.
However, the big headline of the week came from Toronto-Dominion Bank. In its quest to build a half-trillion mortgage business, the bank is on a market share spree. It slashed its uninsured variable rate to a svelte 6.19 per cent. That’s dramatically below the nearest comparable nationally-advertised variable, and it’s the best widely available uninsured discount since 2021. If rates were a concert, TD’s special would be the financial equivalent of a mic drop.
Based on the bond market’s forward rate outlook, as tracked by CanDeal DNA, a 6.19 per cent variable is a decent bet versus Canada’s leading fixed rates. Although, three-year fixed rates still project lower hypothetical borrowing costs on paper — assuming the bond market’s crystal ball isn’t just a fancy paperweight.
In other mortgage news, the leading four-year fixed rates bumped up by five bps. That’s not exactly headline material, though.
As we end the week, keep the peepers on yields after Friday’s marquee U.S. employment report. Bond markets could take rates higher if it’s too strong, and vice versa.
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on X at @RobMcLister.
Want to know more about the mortgage market? Read Robert McLister’s new weekly column in the Financial Post for the latest trends and details on financing opportunities you won’t want to miss
Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.
