March 11, 2024 • 4 mins
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EPISODE DESCRIPTION
In this episode, Tom shares an update on Canadian interest rates for March, 2024, and the trend he sees in them.
What was discussed: → How fixed and variable rates work. → Spreads on variable and fixed rates in different types of mortgages. → And which rates are the ones banks showcase online.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
absolutely mind blowing how nobodyis talking about how rates have
been dropping for the last twomonths.
Now, yes, they have been dropping,they haven't been stagnant.
And I will explain exactly what Imean there because fixed rates and
variable rates, they are hinged ontwo separate things.
So in this video, I'll be talkingabout that.
I'll also be giving you a fullrundown on where rates are at
today here in Canada.
So definitely stick around because
you might have your mind blown bythe end of this.
(00:23):
I dive into where rates are attoday, let me first explain how
fixed and variable rates work.
So fixed rates are hinged off of
the bond market, whereas variablerates are hinged off of what the
Bank of Canada does.
Bank of Canada, they meet eight
times a year, they decide whetherthey're increasing, decreasing or
keeping rates the same.
Bond market happens on a
(00:43):
day-to-day sets the tone on wherefixed basis, rates are at, so
they're more volatile.
So that's why whenever you hear
rates in the headlines, the newsis typically talking about what
the Bank of Canada is doing.
It's really a big bummer how there
isn't much coverage about fixedrates because over the last
couple, I would say, past couplemonths, we have been seeing steady
decreases on fixed rates.
So that's what I'm going to dive
(01:04):
into here today is I'm going totalk about that and also the
different spreads on variable andfixed rates from different types
of mortgages.
So this is for March 2024.
And I'm going to compare thiscompared to back in February.
So you'll see the differences ofrates there as well.
And these are all five year termaverages.
So yes, there might be some lowerout there, some higher, but these
are the averages for five-yearterms.
(01:24):
I'm not going to dive into shorterterms in this video because this
would be a long video and there'dbe a lot of numbers everywhere.
So keep that in mind goingforward.
So first thing is we have ourinsured and our 35% down payment.
So this is one tier.
There's three different tiers when
it comes to mortgages and eachtier unlocks different interest
rates.
So this is going to be your lowest
interest rate that you will see onthe market.
(01:47):
So anything less than 20% down isan insured mortgage.
So you can think of it as like,you probably heard CMHC, that's an
insured back mortgage.
Anything less than 20% down falls
into this think of bracket.
it as you probably like, heard
that's an insured CMHC, backanything mortgage, less than 20%
down falls into this bracket.
On the reverse side, if you have
more of a down payment, so 35%plus, then you also unlock these
tier.
So with the fixed rates, we have
access to 4.99%, which is a 10basis point decrease over
(02:09):
February.
Then we have our variable rates at
6.3%, which is a 0.9% discount.
So what does that mean?
What's this discount?Well, like I said, the Bank of
Canada is what sets the variablerates.
So when you look at the primerate, prime rate today is 7.2.
That is what the Bank of Canadasets.
(02:29):
It's this fancy way of saying thatsets the tone for the rates.
And then when the bank gives you avariable rate, they're either
giving you a surplus or a discountoff of that prime.
So in this case, we have adiscount of 0.9% off of that
prime, which gives you that 6.3%.
Now we go into our second tier at
insurable.
So insurable is anything between
20% down to 34% down.
So this is the second lowest
(02:50):
interest rate bracket here, wehave our fixed rates at 5.09% to
5.24%.
That's our fixed rates.
And that is a 10 basis pointdiscount from last month as well.
So pretty consistent with theinsured as well.
And the variable stays the samefrom last month at 6.45% to 6.6%.
Now we have our third tier, whichis our uninsured mortgages.
So whenever you are purchasing aproperty for over a million
(03:14):
dollars, or you have a 30-yearamortization, you will then be
triggered into the uninsuredbracket.
So that's why when you see ratesposted online, they always look
lower than what you typically getfrom the bank or from a mortgage
broker.
That's because they always
showcase their lowest rates.
And it's always going to be that
insured rate that they're showing.
So chances are a lot of you are
(03:36):
out there and you're probably inthe insurable uninsured bracket.
But if you are purchasing for lessthan 20% down, then you would be
the insured bracket, of course,like I just mentioned.
So the uninsured bracket, we havethe 5.54% fixed rate, and the
variable is 6.85%.
So you can see from lowest to
highest there.
But the biggest surprising factor
here is that we are in the foursnow.
So a lot of people aren't talkingabout this, we're already creeping
(03:59):
into the fours for interest rates.
And I mean, like, to me, that's a
lot lower than what people think,like people think we're in the mid
sixes for everything.
But you can see here, we're not
two months ago, we were but notanymore.
So there you have it.
That's everything.
If you guys have any questions, asalways, please comment down below
and let me know your thoughts onthis.
(04:19):
If you were rather shocked withthis, or do you think we're going
to see some more decreases in thenear future?
And let me know when you think theBank of Canada is going to make
its first cut.
Cheers.
absolutely mind blowing how nobodyis talking about how rates have
been dropping for the last twomonths.
Now, yes, they have been dropping,they haven't been stagnant.
And I will explain exactly what Imean there because fixed rates and
variable rates, they are hinged ontwo separate things.
So in this video, I'll be talkingabout that.
I'll also be giving you a fullrundown on where rates are at
today here in Canada.
So definitely stick around because
you might have your mind blown bythe end of this.
(00:23):
I dive into where rates are attoday, let me first explain how
fixed and variable rates work.
So fixed rates are hinged off of
the bond market, whereas variablerates are hinged off of what the
Bank of Canada does.
Bank of Canada, they meet eight
times a year, they decide whetherthey're increasing, decreasing or
keeping rates the same.
Bond market happens on a
(00:43):
day-to-day sets the tone on wherefixed basis, rates are at, so
they're more volatile.
So that's why whenever you hear
rates in the headlines, the newsis typically talking about what
the Bank of Canada is doing.
It's really a big bummer how there
isn't much coverage about fixedrates because over the last
couple, I would say, past couplemonths, we have been seeing steady
decreases on fixed rates.
So that's what I'm going to dive
(01:04):
into here today is I'm going totalk about that and also the
different spreads on variable andfixed rates from different types
of mortgages.
So this is for March 2024.
And I'm going to compare thiscompared to back in February.
So you'll see the differences ofrates there as well.
And these are all five year termaverages.
So yes, there might be some lowerout there, some higher, but these
are the averages for five-yearterms.
(01:24):
I'm not going to dive into shorterterms in this video because this
would be a long video and there'dbe a lot of numbers everywhere.
So keep that in mind goingforward.
So first thing is we have ourinsured and our 35% down payment.
So this is one tier.
There's three different tiers when
it comes to mortgages and eachtier unlocks different interest
rates.
So this is going to be your lowest
interest rate that you will see onthe market.
(01:47):
So anything less than 20% down isan insured mortgage.
So you can think of it as like,you probably heard CMHC, that's an
insured back mortgage.
Anything less than 20% down falls
into this think of bracket.
it as you probably like, heard
that's an insured CMHC, backanything mortgage, less than 20%
down falls into this bracket.
On the reverse side, if you have
more of a down payment, so 35%plus, then you also unlock these
tier.
So with the fixed rates, we have
access to 4.99%, which is a 10basis point decrease over
(02:09):
February.
Then we have our variable rates at
6.3%, which is a 0.9% discount.
So what does that mean?
What's this discount?Well, like I said, the Bank of
Canada is what sets the variablerates.
So when you look at the primerate, prime rate today is 7.2.
That is what the Bank of Canadasets.
(02:29):
It's this fancy way of saying thatsets the tone for the rates.
And then when the bank gives you avariable rate, they're either
giving you a surplus or a discountoff of that prime.
So in this case, we have adiscount of 0.9% off of that
prime, which gives you that 6.3%.
Now we go into our second tier at
insurable.
So insurable is anything between
20% down to 34% down.
So this is the second lowest
(02:50):
interest rate bracket here, wehave our fixed rates at 5.09% to
5.24%.
That's our fixed rates.
And that is a 10 basis pointdiscount from last month as well.
So pretty consistent with theinsured as well.
And the variable stays the samefrom last month at 6.45% to 6.6%.
Now we have our third tier, whichis our uninsured mortgages.
So whenever you are purchasing aproperty for over a million
(03:14):
dollars, or you have a 30-yearamortization, you will then be
triggered into the uninsuredbracket.
So that's why when you see ratesposted online, they always look
lower than what you typically getfrom the bank or from a mortgage
broker.
That's because they always
showcase their lowest rates.
And it's always going to be that
insured rate that they're showing.
So chances are a lot of you are
(03:36):
out there and you're probably inthe insurable uninsured bracket.
But if you are purchasing for lessthan 20% down, then you would be
the insured bracket, of course,like I just mentioned.
So the uninsured bracket, we havethe 5.54% fixed rate, and the
variable is 6.85%.
So you can see from lowest to
highest there.
But the biggest surprising factor
here is that we are in the foursnow.
So a lot of people aren't talkingabout this, we're already creeping
(03:59):
into the fours for interest rates.
And I mean, like, to me, that's a
lot lower than what people think,like people think we're in the mid
sixes for everything.
But you can see here, we're not
two months ago, we were but notanymore.
So there you have it.
That's everything.
If you guys have any questions, asalways, please comment down below
and let me know your thoughts onthis.
(04:19):
If you were rather shocked withthis, or do you think we're going
to see some more decreases in thenear future?
And let me know when you think theBank of Canada is going to make
its first cut.
Cheers.
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