As some Canadian lenders expect central banks, such as the Bank of Canada, to lower influential interest rates in 2024, borrowers can expect a late Christmas present with lower rates on certain types of mortgages.
Rates of less than five per cent on specific types of fixed mortgages are on offer — the lowest Canadians looking to finance a home purchase have seen since the late spring.
“The last time we saw a five year fixed at around 4.89 or 4.99 per cent was the middle of May [2023], around Victoria Day weekend,” said Victor Tran, with ratesdotca, a website that compares mortgage rates, credit card products and insurance costs for Canadians.
Tran, along with other mortgage industry experts and economists, points to lower returns from government bonds as a reason for the drop in some mortgage costs.
“Fixed mortgage rates are directly tied to the government bond yields. So we peaked in October,” he said in an interview with CBC News, noting that the yields have since dived.
Victor Tran with ratesdotca pins the lower rates to lower government bond yields. (CBC)
Bond yields vs. interest rates
The select mortgage rates that have fallen below five per cent are currently only for fixed five year, insured mortgage terms. This would typically be mortgages with a down payment of less than 20 per cent.
Canadians in the market for that specific type of mortgage may be seeing lower costs than earlier this year.
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“They will find some savings if they have to renew a mortgage in the next coming months,” said Tran, who noted that it’s “really nice” to see some mortgage rates coming down as 2023 wraps up.
But lower government bond yields aren’t going to help Canadians who prefer variable mortgage rates. At least not yet, explained James Laird of Canadian mortgage website Ratehub.
“Bond yields react to future things, whereas variable rate mortgages and home equity lines of credit actually have to wait for the Bank of Canada to lower that overnight [interest] rate, which will cause the prime rate to drop, therefore lowering variable rates and home equity lines of credit,” he said.
Laird also pointed out that his company has been tracking housing affordability in many Canadian cities, and that while affordability has improved in some regions, that was due to house prices falling, not because of rates.
James Laird with Ratehub points out that affordability for homes in Canada has been improving in some cities, but that’s due to falling house prices and not interest rates. (CBC)
However, even if just one specific type of fixed mortgage rate has lowered, Laird believes Canadians should be pleased.
“Consumers do not like uncertainty and they certainly don’t like rates rising with an unknown top. And now that it seems like the top is probably behind us and rates are coming down, we’re seeing enthusiasm for people to reenter the housing market in the new year,” he said.
Lower rates could mean more housing demand
Some mortgage brokers, such as Vancouver’s Jacob Sneg, point out that many Canadians are waiting on lower mortgages before getting into the housing market.
“I’m constantly in touch with my clients, and they are all on the fence,” he said.
But he also cautioned that being on that fence could cost more in the long run, because as mortgage rates drop, more buyers are likely to enter the market and buyers will face more competition for homes thereby increasing the purchase price.
“If you say, ‘I’m not buying because of the high rate,’ so maybe in three months you get a better rate, but you lose on the price,” said Sneg.
Inflation might be easing but don’t expect prices to fall
Canadians have been paying more for everything as prices surged during the pandemic. But as inflation eases, prices will remain high and some economists say that’s a good thing.
Lower rates may not bring bigger economy
Canada’s central bank had been increasing interest rates to try to lower inflation, and the resulting higher borrowing costs have caused a pullback in business investment and consumer spending.
In part, this could be because Canadians had to divert more of their budgets toward higher mortgage costs.
Bank of Canada Governor Tiff Macklem arrives for the annual meeting of federal, provincial, and territorial finance ministers in Toronto on Dec. 15, 2023. (Nathan Denette/The Canadian Press)
According to The Canadian Press, researchers at the Bank of Canada said about 45 per cent of mortgages that were taken out before the central bank started raising rates saw an increase in their payments by the end of November.
The Bank of Canada researchers said nearly all remaining mortgage holders in this group will renew by the end of 2026, likely meaning higher payments for them as well, and this wave of mortgage renewals is expected to have a chilling effect on the economy.
Forecasts suggest economic growth will be weak in 2024 before picking up again toward the end of the year.
TORONTO – Canada Goose Holdings Inc. says it has signed a deal that will result in the creation of its first eyewear collection.
The deal announced on Thursday by the Toronto-based luxury apparel company comes in the form of an exclusive, long-term global licensing agreement with Marchon Eyewear Inc.
The terms and value of the agreement were not disclosed, but Marchon produces eyewear for brands including Lacoste, Nike, Calvin Klein, Ferragamo, Longchamp and Zeiss.
Marchon plans to roll out both sunglasses and optical wear under the Canada Goose name next spring, starting in North America.
Canada Goose says the eyewear will be sold through optical retailers, department stores, Canada Goose shops and its website.
Canada Goose CEO Dani Reiss told The Canadian Press in August that he envisioned his company eventually expanding into eyewear and luggage.
This report by The Canadian Press was first published Sept. 19, 2024.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – TD Bank Group, which is mired in a money laundering scandal in the U.S., says chief executive Bharat Masrani will retire next year.
Masrani, who will retire officially on April 10, 2025, says the bank’s, “anti-money laundering challenges,” took place on his watch and he takes full responsibility.
The bank named Raymond Chun, TD’s group head, Canadian personal banking, as his successor.
As part of a transition plan, Chun will become chief operating officer on Nov. 1 before taking over the top job when Masrani steps down at the bank’s annual meeting next year.
TD also announced that Riaz Ahmed, group head, wholesale banking and president and CEO of TD Securities, will retire at the end of January 2025.
TD has taken billions in charges related to ongoing U.S. investigations into the failure of its anti-money laundering program.
This report by The Canadian Press was first published Sept. 19, 2024.
