Slower Housing Sales and Competing Mortgage Brokers Lead to Low Mortgage Rates.

Canadian homebuyers are being offered some of the lowest mortgage rates seen in years as lenders battle to drum up new business.

The standard five-year fixed-rate mortgage rates have fallen to their lowest level in two years which means borrowers just about everywhere across the country can take their pick of offerings well below three per cent according to Ratehub.ca – a website with the stated mission to help Canadians make smarter financial decisions.

Lenders are offering five-year fixed rates as low as 2.64 per cent for certain buyers, and even higher-risk borrowers may be able to find a loan for 2.89 per cent. These are the lowest range since the summer of 2017.

Lenders finance fixed-rate loans based on the rates they can get in the bond market. Essentially, they'll borrow money themselves at one rate, loan it out to a borrower at a higher rate and make money on the spread. The yield on a five-year Government of Canada bond dipped below 1.3 per cent this month. If a lender can borrow funds for as little as 1.3 per cent then turn around and make money by loaning it out for twice that rate, they have every incentive to keep offering those deals.