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

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Insured borrowers still get the best deals

The gap between default-insured and uninsured mortgage rates just keeps getting wider, at least for the terms people want most.

Take two-year fixed-rate and variable-rate mortgages, for example. They’re a hot commodity because more people want shorter commitments — given they think rates are coming down by next year.

The spread between insured and uninsured mortgages grew five basis points this week on two-year fixed and variable-rate mortgages. (A basis point is one-hundredth of a percentage point.)

On an insured two-year, for example, you can now get rates as low as 4.99 per cent from a national lender. If that same mortgage is uninsured, you’ll pay 5.44 per cent and up, given the extra theoretical risk to the lender.

This divergence reflects higher funding costs and more bank control of uninsured mortgage pricing, a trend that keeps worsening as potential recession causes a greater implied risk to lenders.

Are millions of home owners now taking over 30 years to pay off their mortgage? Not exactly

It’s unlikely this problem will correct itself any time soon, at least until there’s a more liquid source of uninsured funding in this country.

That aside, it was another fairly quiet week for mortgage rates, as the bond market awaits more signs of falling inflation.

Rates are as of May 4, 2023, 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 MortgageLogic.news. You can follow him on Twitter at @RobMcLister.