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Canada's banking regulator is expected to make an announcement regarding the interest rate used in a key stress test for uninsured mortgages this morning. New homes are built in a housing construction development in the west-end of Ottawa on May 6, 2021. THE CANADIAN PRESS/Sean KilpatrickSean Kilpatrick/The Canadian Press

A better-than-expected drop in U.S. inflation this week sparked enough optimism to drive bond yields lower. That continued a downtrend in yields that began last month, triggered by investors believing the peaks in rates and inflation are in.

Falling yields usually mean falling fixed mortgage rates and this time is no exception. We’ve seen the lowest widely available uninsured five-year fixed rates drop five bps this week, to 5.24 per cent.

McLister: The mortgage stress test hasn’t gotten easier – yet

The lowest insured rates are all still in the mid- to upper 4 per cent range.

As for floating rates, they’re now 50 bps higher than last month thanks to the Bank of Canada’s rate bump on Dec 7. That puts variable rates at more than 60 bps above the lowest fixed rates. That extra interest expense and the fact that variables are harder to qualify for – thank you, stress test – will slow their uptake.

Floating rates will likely become much more popular within a year or so, or whenever the Bank of Canada changes its bias from rate hikes to rate cuts.

Lowest nationally available mortgage rates

1-year fixed5.84%Ratehub4.69%Quest Mortgage
2-year fixed5.54%HSBC4.69%Quest Mortgage
3-year fixed5.34%First National4.64%Nesto
4-year fixed5.24%First National4.69%Quest Mortgage
5-year fixed5.24%First National4.69%Quest Mortgage
10-year fixed5.94%HSBC5.54%Nesto
5-year hybrid5.67%HSBC5.94%Scotia eHOME

*Home equity line of credit. Source: Robert McLister; data as of Dec. 15

Rates shown in the accompanying table are as of Thursday from providers that 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 those 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 You can follow him on Twitter at @RobMcLister.