Canadian Fixed Mortgage Rates Edge Higher as Variable-Rate Preference Slows
Nationally leading fixed mortgage rates in Canada rose slightly this week amid inflation concerns, even as lender funding costs held steady. Borrowers continue to favor variable-rate mortgages, though the share of prime borrowers choosing them has dipped month-over-month.
Nationally leading fixed mortgage rates inched up again this week in Canada, driven by rising inflation concerns. Despite increases in oil prices and U.S. inflation, most lenders' funding costs did not go up, which eased pressure on fixed rates.
Canadians are still predominantly choosing variable-rate mortgages over fixed rates. However, anecdotal data from Dominion Lending Centres Group indicates that this preference is slowing. According to the group, 52.8 per cent of prime borrowers chose variable rates this month to date, down from 57.1 per cent last month.
Market expectations currently do not fully price in the first Bank of Canada rate hike until January, with four additional hikes pencilled in through early 2028. Those five projected rate hikes total 125 basis points, representing only 15 to 25 basis points more than the average difference between fixed and variable rates.