Good news: Recent cuts to 5-year fixed mortgage rates
The 5-year fixed mortgage rate is the most popular rate in Canada. And, some good news for buyers: the Royal Bank of Canada cut its interest rate for 5-year fixed-term mortgages in January 2019 to 3.74 per cent from 3.89 per cent. Experts in the market are anticipating the major banks will probably settle their featured 5-year fixed rates lower to about 3.64 per cent.
While fixed mortgage rates are getting cheaper, variable-rate mortgages have been getting more expensive, narrowing the gap between them.
This is a vast departure from the sky-high rates from the 1980s. In March 1982, the average 5-year fixed mortgage rate was 19.4%! In fact, 5-year fixed mortgage rates never fell below ten per cent for a full 18 years – from 1973 to 1991.
Thankfully, rates are unlikely to climb again to those levels for many reasons including globalization, a shift in demographics, and lower wage pressures, all of which helps to control inflation.