Canadians scramble to get mortgage pre-approvals as rate hikes loom

Economists predict the COVID-19 pandemic-long stretch of low interest rates will soon end.

Canadians are scrambling to get mortgage pre-approvals and rate holds before the era of low interest rates comes to an end, as some economists predict.

Real estate and mortgage brokers say their clients are increasingly seeking ways to hold on to current rates because many housing markets like Toronto are facing heated conditions making it hard to keep purchase prices down.

“It’s a seller’s market and you barely have the opportunity to put conditions (on a purchase) because there are 400,000 people waiting for their permanent residency, 200,000 of them are already here and there’s buyers lined up around the corners,” said Estee Zacks, the Toronto-based owner of Strategic Mortgage Solutions Inc.

“They feel weak, and they are statistically, so they’re just trying to get a leg up as much as they can.”

Zacks has noticed a recent surge in requests for rate holds, which freeze mortgage rates for up to 130 days.

Mortgage rates vary across banks, but Ratehub.ca shows the country’s top five banks are offering five-year fixed mortgages for as low as 2.62 per cent and as high as 2.94 per cent.

Three-year fixed mortgages range from 2.49 to 3.49 per cent, while five-year variable mortgages vary between 1.40 and 1.75 per cent.

The interest rate, which also weighs on homebuyers, has sat at 0.25 per cent since March 2020, but the Bank of Canada has hinted it could rise as the country continues to climb out of the pandemic and loosen restrictions.