Lowest fixed and variable mortgage rates in Canada for October 5 2023

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Mortgage stress test rates top 8 per cent

Interest rates have been on one hell of a ride. Canada’s four-year swap rate, a leading indicator of fixed mortgage rates, is now up more than eight times from its postpandemic low. (Swaps are derivatives that banks use to hedge mortgage-rate risk.)

The 4-year swap rate peaked at a new 16-year high on Tuesday, and now the market’s waiting for critical employment data this Friday and inflation data in the next couple of weeks.

The biggest driver of inflated yields has been a deteriorating U.S. fiscal picture, which is scaring away demand for U.S. bonds – or at least, demand at current yields.

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Given the cozy relationship between U.S. and Canadian interest rates, the outcome for borrowers on this side of the border is the same: another uptick in borrowing costs.

As this is being written, the lowest transparently advertised, nationally available, uninsured lender rate (wow, that’s a mouthful) is a 5-year fixed at 6.14 per cent from HSBC. RateHub is advertising 5.94 per cent, but they don’t say who the lender is.

Unless you’re a default-insured borrower, a rate above six per cent means a mortgage borrower must prove they can afford rates above 8 per cent, thanks to the federal mortgage “stress test.” That’s a 52-per-cent increase in the qualifying rate in just 19 months.

Compared with February, 2022, someone making $100,000 – with no other debt, a 20-per-cent down payment and a 30-year amortization – can theoretically afford at least 28 per cent less home. That’s not cheery news for folks who want the biggest mortgages they can get, and most do.

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Rates were sourced from the MortgageLogic.news Canadian Mortgage Rate Survey on Oct. 5, 2023. We include only providers who advertise rates online and lend in at least nine provinces. Insured rates apply to those buying with less than a 20 per cent down payment or switching a pre-existing insured mortgage to a new lender. Uninsured rates apply to refinances and purchases over $1-million and may include applicable lender rate premiums. For providers whose rates vary by province, their highest rate is shown.

Robert McLister is an interest rate analyst, mortgage strategist and editor of MortgageLogic.news. You can follow him on Twitter at @RobMcLister.

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