Lately, I’ve been getting a lot of questions from clients wondering why Canadian Fixed Rates aren’t budging, even though the Bank of Canada keeps dropping rates. I get it — it can be frustrating to see Canadian variable rates moving down while Canadian Fixed Rates seem stuck.

After the first and second rate drops, Canadian Fixed

Rates followed suit, but this last time, nothing really changed. Some lenders even nudged their fixed rates up a bit. I know that can feel confusing, but there’s actually a simple reason for it.

Here’s the deal — fixed rates in Canada are tied directly to bond yields, especially the 5-year bond. When those bonds are volatile, fixed rates tend to hold or even go up. It’s not really about what the Bank of Canada does with its rates, but rather how the bond market reacts.

Bank of Canada
Canada’s Central Bank

A lot of people don’t realize you can track the 5-year bond yourself. I often recommend YCharts (https://ycharts.com/indicators/canada_5_year_benchmark_bond_yield) as a great resource to stay on top of bond movements. If you see bond yields drop, you can literally reach out to lenders that day and ask about their fixed rates. Sometimes they’ll adjust quickly, but often they wait to see if the bond levels hold.

I remember chatting about this in one of my podcast episodes, The Money Storm Show, and our partners at Brightcap Financial – national commercial mortgage specialists – have echoed the same advice (https://www.brightcapfinancial.ca/). They’re always watching bond yields and how lenders react.

It’s important to stay patient. Unlike the stock market, which reacts in real time, lenders tend to move slower. They wait for stability in bond yields before making big adjustments. So, if you’re waiting for fixed rates to drop, just know it’s a matter of time. The market always finds its level.

In the meantime, I’ll keep an eye on things and share updates as they happen.

Key Factors Affecting Fixed Mortgage Rates:

1. Bond YieldsFixed mortgage rates often move in tandem with Government of Canada bond yields, especially the 5-year bond. When bond yields rise, lenders face higher costs of borrowing and typically pass those costs on to consumers through higher mortgage rates. Bond yields have been increasing recently, and that’s been reflected in the uptick in fixed mortgage rates.
2. Bank of Canada’s Overnight RateWhile the overnight rate directly impacts variable mortgage rates, it indirectly affects fixed rates as well. When the Bank of Canada raises its key interest rate, investors might expect further hikes in the future, which drives bond yields higher. These rising yields result in higher fixed mortgage rates for borrowers.
3. InflationInflation has been one of the biggest drivers of the recent rate hikes. To combat rising prices, the Bank of Canada has been raising its key interest rate, which pushes bond yields up and, in turn, raises fixed mortgage rates. When inflation expectations rise, investors demand higher yields on government bonds, leading to higher fixed rates.
4. Economic GrowthA strong economy generally leads to higher interest rates, as central banks often raise rates to prevent the economy from overheating. This has been the case recently, with a strong recovery and continued growth prompting the Bank of Canada to increase its rates. This environment puts upward pressure on fixed mortgage rates as well.
5. Lender’s Cost of BorrowingMortgage lenders borrow money to fund the mortgages they offer to clients. When their borrowing costs go up (due to higher bond yields or rising rates), they adjust their mortgage rates to reflect those increased costs. In the current economic climate, lenders are facing higher borrowing costs, which contributes to the higher fixed mortgage rates we’re seeing.

If you’re looking to stay informed on the latest mortgage trends, market updates, and tips to navigate these changes, be sure to check out my full blog at larryheran.com/blog. Stay ahead of the curve and make informed mortgage decisions with regular insights from my blog.

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Hello, I’m Larry Heran, and as the owner of City Centre Mortgages, based right here in the centre of the south in South Surrey, I always make it a priority to keep my clients informed about the local housing market in Surrey. The Surrey real estate market directly impacts your home buying decisions, and understanding the latest trends can give you a significant advantage in securing a more affordable home.

With over a decade of experience helping Surrey residents secure the right mortgage financing solutions, I know just how important it is to stay on top of the market. So, let’s dive into the latest Surrey housing stats and explore how they can affect your home purchasing decisions.

Surrey’s Housing Market Trends

As we move through 2024, the Surrey housing market is showing some interesting trends. In November, Surrey’s median list price was around $1.1 million, with homes taking an average of 66 days to sell. This marks a slight increase compared to the previous month, signaling that the market is stabilizing after some ups and downs earlier in the year.

As someone deeply involved in the mortgage industry, I can tell you that these shifts are significant, especially when considering how Canadian mortgage rates have been evolving. With the recent decrease in mortgage rates in Canada, many potential homebuyers are now able to enter the market with more purchasing power, which is helping to breathe life back into the Surrey real estate market.

However, it’s important to remember that even with decreasing rates, affordability can still be a challenge for some buyers. But with the right strategy and guidance, we can work together to help you make the best choice for your financial future.

Breaking Down Surrey’s Core Areas

At City Centre Mortgages, we work with clients from all across Surrey, and understanding the specific neighbourhood dynamics is key when navigating the housing market in Surrey. Here’s a quick overview of some of Surrey’s most sought-after areas:

South Surrey: This is my home turf, and I know it’s a favourite for families and first-time homebuyers. In November, homes in South Surrey were listed at a median price of $1.4 million, with properties generally staying on the market for about 63 days. It’s a competitive area, and I’ve helped many clients find their dream homes here.

Fraser Valley: Surrey is a central hub in the Fraser Valley, which is a growing and diverse region. Homes here are seeing more balanced activity, as the market returns to more seasonal norms. For those looking for a well-priced home in a vibrant community, Surrey offers a variety of options to explore.

Mortgage Rates and Affordability

One of the most important factors to consider when buying a home in Surrey is mortgage rates. Over the last few months, we’ve seen a decrease in Canadian mortgage rates, and this can make a big difference in your purchasing power. As rates drop, your mortgage pre-approval amount could be higher compared to what you would have been eligible for a year ago.

At City Centre Mortgages, I take great pride in keeping my clients informed about how these changes affect their ability to buy a home. While rates are coming down, affordability remains a top concern for many. That’s why I focus on finding the best mortgage solutions to suit your specific financial situation, ensuring that your monthly payments are manageable and that you’re not stretching your budget too thin.

Whether you’re buying your first home, upgrading, or refinancing, understanding how mortgage rates impact your financial picture is essential. With decreasing rates, now might be a great time to consider getting pre-approved for a mortgage and locking in a lower rate before things change again.

What Does This Mean for You?

With the current trends in Surrey’s housing market, it’s clear that we are moving into a more stable and buyer-friendly environment. As homes continue to be in demand, it’s essential to make informed decisions about your financing options. Lower mortgage rates can make homeownership more affordable for many buyers, but it’s crucial to work with an experienced mortgage broker who understands the nuances of the market.

At City Centre Mortgages, I’m here to help you navigate these changes. I take a personalized approach to every client, ensuring that you get the right mortgage solution for your needs. Whether you’re buying in South Surrey or anywhere in the Fraser Valley, my team and I are dedicated to making your homeownership dreams a reality.

Let’s Take the Next Step Together

If you’re considering purchasing a home in Surrey, now is a great time to reach out. With my deep knowledge of the local market in Surrey and the latest mortgage rate trends, I can help you make the best possible decision for your future. I’ll guide you through the mortgage process with ease and ensure you have the support you need at every step.

Contact me today to discuss how we can make your homeownership dreams come true.

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Stay informed, stay confident, and let City Centre Mortgages help you find the right mortgage for your home purchase. I look forward to working with you!

Introduction: The Canadian government’s recent decision to significantly reduce immigration targets for the next three years is poised to have a profound impact on the nation’s economy, including the housing market and the mortgage industry. This policy shift, aimed at “pausing population growth,” will undoubtedly have far-reaching consequences for Canadians across the country. This article will delve deeper into the potential impacts on these key sectors. 

First Time Home Buyers

Your First Home. What a THRILLING thing that is to think about!! One of the best parts about our job is helping individuals purchase their first home. We know that the process can seem daunting at first, but we have an in-depth understanding and knowledge of what steps are required to make the process go smoothly. Follow these and you will be turning the key into your new home before you know it.

1. Find a Fantastic Mortgage Broker
Finding a mortgage broker who can help with your pre-approval process can allow you to determine the price point of home you can really afford. Finding a mortgage broker right off the bat can also give you an advantage over working with your bank:

• Mortgage Brokers work for you, not the bank or lender
• They have access to multiple lenders and are not limited to one single product
• They are an expert in the field. They focus on mortgages and mortgages alone!

2. Get Comfortable With The Numbers
There are two numbers that all first-time homebuyers should keep in mind: 39 and 44. These two numbers can help you budget and determine what you can truly afford when looking to purchase a home. Why 39 and 44? Here’s why:

• A maximum of 39% of your total income can go towards your housing costs. This will cover your mortgage payment, property tax payment, heating costs, and strata fees.
• A maximum of 44% of your total income can go towards your housing costs and total debt payments. This will include ALL housing costs and all debt repayments (credit cards, car loans, student loans, etc.)

Now, here are a few other key numbers that can help you in your house hunting:

3. Know What Your Down Payment Needs to Be
You know the numbers, now let’s look at what you need to know about the down payment itself. First, if you have less than 20% down payment your mortgage will be insured and have insurance premiums added to your mortgage. If you are considering putting the minimum down, that would be 5% if the property is worth $500,000 or less. A down payment of 10% is required for any amount over $500,000. Here’s a quick example of what this looks like:

Purchase Price of $600,000

5% of $500,000                                   $25,000

10% of $100,000                                             $10,000

Total Down Payment:                                   $35,000

4. Take Advantage of The RRSP Home Buyers Plan
The Canadian government’s Home Buyers’ Plan (HBP) allows for first time home buyers to borrow up to $25,000 from you RRSP for a d own payment, tax-free! You are able to combine this with your partner if you are both first time home buyers you can both access the $25,000 from your RRSP for a combined total of $50,000. Certain qualifications do apply for you to use this plan, we have laid them out here for you to review.

5. Don’t Forget About the Closing Costs!
This is one so many people overlook! Closing costs are something that can add up quickly when you are purchasing a home. Here is an approximate breakdown of the funds you will need:

• Legal Costs: $1000
• Title Insurance: $200
• Appraisal: $350
• Property Transfer Tax: Pending on purchase price

An additional few facts on property tax for you to consider:

This is an approximation of what your closing costs may be, but it is always good to budget for them beforehand.

6. Have your Documents Ready to Roll
Mortgages = paperwork! There are a number of documents that you will need to have to give to your mortgage broker. This will vary depending on your employment situation and where your down payment is coming from, but here is a general list you can follow:

• Most Recent paystub
• Letter of Employment
• NOA’s (2 years)
• T4’s (2 years)
• Down payment verification—up to 3 months of bank statements
• Contract of Purchase and Sale (Your realtor will provide this)
• Property Disclosure Statement (Realtor will provide)
• if you are self-employed you may also have to show:
  o T1 Generals
  o Articles of Incorporation
  o Financial Statements

7. Start Working on Your Credit Score
Yes, your credit score does directly impact your ability to get a mortgage. Lender’s want to see that you can responsibly manage credit and debt repayment before loaning you a large sum of money to purchase a home. Your credit score will be a determining factor in the terms and rate associated with your mortgage.

Just what impacts your credit score? Good question! Here are a few things:

• Late payments will lower your score
• Collections, judgements, consumer proposals, bankruptcy this will lower your score
• Exceeded limits on credit cards
• Ideally, you will be able to show a minimum of 2 active and current trade lines
• The longer your trade line is, the better increase in your score!
• Lenders also like to see a minimum of $2,000 limit on your credit cards.

Understanding and using this knowledge can help make your first home buying experience a great one! Once you have gone through the pre-approval process with a mortgage broker the fun part begins! Upon you receiving your preapproval, you can begin the house hunting. From there, you can put an offer on your dream home (yay!) Once your offer is accepted, we go through the mortgage process with you and then it’s moving day for you!

This is an exciting time for first time homebuyers—we enjoy getting to help our clients go from start to finish and helping them get the keys to their first ever home. If you have questions or are looking to find out just how much you will qualify for you can check out our mortgage calculator OR you can reach out to a Dominion Lending Centres mortgage professional directly!