Mortgage providers across the country have been dropping fixed mortgage rates throughout the week in response to a sharp decline in bond yields.

As we reported last week, the 5-year Government of Canada bond yield—which usually leads fixed mortgage rate pricing—slid nearly 30 basis points and continues to hover around 3.80%.

It’s now down more than 60 bps—or 0.60%—from its recent high of 4.42% reached in early October.

Over a dozen national mortgage providers have now dropped their rates by 10 to 30 bps (0.10% to 0.25%), with most rate changes concentrated in the 3- to 5-year terms, according to data compiled by MortgageLogic.news.

As Ryan Sims, a TMG The Mortgage Group broker and former investment banker, told CMT, the rate drops were not expected to match the decline we’ve seen in bond yields over the past week due largely to risk premiums.

“Rates will come down for mortgages, but not nearly as much as they should,” he said. “That’s because lenders and mortgage providers are likely to keep risk premiums baked into their pricing given the potential for an economic downturn in the near term.

Finance committee calls on government to block RBC-HSBC deal

The House of Commons Standing Committee on Finance has called on the Minister of Finance to reject RBC’s proposed acquisition of HSBC Canada.

The proposed $13.5-billion deal first announced in November 2022 has received approval from the Competition Bureau in September, and will now go before Finance Minister Chrystia Freeland.

In making its recommendation to block the deal, the Standing Committee on Finance said in a statement that “there are already very few financial institutions in the Canadian banking sector representing a lack of competition.”

It said that the removal of HSBC as a competitor to the Big 6 banks “could raise banking fees for Canadians who already pay more for financial services due to an already uncompetitive financial sector.”

HSBC is a key competitor in Canada’s mortgage market, often promoting market-leading rates for select terms, including its Home Equity Line of Credit (HELOC).

While the Competition Bureau ultimately approved the deal, it did note that the deal would “result in a loss of rivalry between Canada’s largest and seventh-largest banks.”

RBC CEO Dave McKay has called the proposed acquisition a “unique and once-in-a-generation opportunity” that he said would make RBC the “bank of choice for commercial clients with international needs, newcomers to Canada and affluent clients who need global banking and wealth management capabilities.”

Sagen reports Q3 earnings

Sagen, Canada’s largest private default mortgage insurance provider, reported net income of $148 million in the third quarter, up 20% from a year earlier.

Here’s a run-down of some of the key financial highlights:

Net income: $148 million (+20% YoY)
Transactional insurance premiums written: $198 million (+21% QoQ and -20% YoY)
Portfolio insurance premiums written: $10 million (+100% QoQ and +67% YoY)
Net losses on claims: $8 million (-27% QoQ and +14% YoY)
Average paid claim: $82,000 (-34% QoQ and -42% YoY)
Loss ratio: 4% (-3 pts QoQ and flat YoY)
Delinquency rate: 0.15% (vs. 0.15% in Q2 and Q3 2022)

Rent, affordability issues among top concerns for Canadians

An overwhelming majority of Canadians have identified rising rent costs (91%) and overall affordability challenges (90%) as among the most significant issues facing the country today.

A majority of respondents (59%) in both cases say the issues are “a very serious problem,” according to the results of an Abacus survey commissioned by the Canadian Real Estate Association.

“This collective unease is further underscored by the fact that half of the population has witnessed their concerns about housing affordability intensify in recent months (52%),” the report noted.

Overall, a full three quarters (75%) of Canadians believe that the current state of housing is unaffordable. Another 7 in 10 believe that no tier of government—federal, provincial or municipal—has done an adequate job to address issues relating to housing affordability.

In terms of assigning blame, Canadians largely believe responsibility for the housing crisis lies with the federal government (49%), followed by their provincial governments (41%) and the municipal governments (10%).