Canada's Big 5 banks are not in a discounting mood. They've been pricing fixed rates well above normal for months, relative to common funding cost benchmarks.

For context, look at the last five years for example. Over that span, uninsured 5-year fixed rates averaged 122 bps over the 4-year swap rate—our preferred funding cost benchmark.

Today, they're 166 bps over, 36% more.

Bigger premiums should be expected at this tentative point in the economic cycle, but at 44 bps above average one might also expect room for rate improvement.

For uninsured borrowers waiting for meaningfully lower fixed rates, however, history shows that it could be five to nine months before spreads normalize.

The factors now driving inflated uninsured rates

Today's shockingly strong U.S. jobs report was a stark reminder that high rates could haunt the housing market longer than expected.

January payrolls soared 517,000 versus the 188,000 consensus call. The 3.4% unemployment rate was America's lowest since 1969.

The news is a buzzkill for Canadian rate doves who've been celebrating both the Bank of Canada's rate pause and a less hawkish sounding Fed.

The world's most influential central bank upped its cost of borrowing 25 basis points today. It was the Fed's smallest hike since March 2022.

America's policy rate is now its highest in over 15-years, and well into what policymakers call "restrictive territory."

Stock and bond markets around the world rallied on the Fed's decision. The bond market, which has been leading the Fed (not vice versa like the old days), drove yields lower. Canada's all-important 5-year yield, for example, dove 10 bps to 2.94%.

The latest version of MLN's Amortization Simulator is now live.

It is fully updated to reflect bond market rate projections for the next five years.

Back in the day when I was running a mortgage comparison website, I used to look in the rearview mirror and see a company called Wowa.

Before we knew it, Wowa had overtaken almost every competitor on pageviews, cementing itself as Canada’s #2 rate comparison site behind the industry's 800-pound gorilla, Ratehub. It has been swiping market share from Ratehub ever since.

Wowa’s rapid ascent in the fiercely competitive rate comparison business has been astounding. It's gone from zero to over half a million unique users per month — in less than 60 months.

And it was all driven by a man who knows how to play the Google game as well as anyone in the industry. His name is Dr. Hanif Bayat. I interviewed him because his approach is fascinating. What follows is a must-read for anyone who hopes to attract organic online traffic, mortgage traffic or otherwise.

In MLN's captivating 90 minute interview with this industry leader, here is what we learned...

Canada's banking regulator has some potentially momentous new mortgage restrictions coming in 2023.

If the final lender guidance turns out to be as impactful as expected, many highly levered uninsured mortgage borrowers will apply before changes take effect. The goal being, to ensure OSFI's new debt service limits don't kibosh their approval.

The question is, will the regulator and lenders allow this?

The reverse mortgage company that doesn't care how old you are is out of business, temporarily at least.

Fraction made a splash by lending homeowners money with no payments and no age minimum. Whereas traditional reverse mortgage providers want you to be 55+, Fraction often lent to people in their 40s.

It offered low rates in exchange for taking a share of the borrower's home appreciation. And its loan-to-value limits were high at younger ages, relative to its competitors.

Unfortunately, Fraction hit a little roadbump. The company ran out of money we hear, and it has let go most of its staff. It reportedly processed its last mortgage in November.

The BoC should've orchestrated a more hawkish pause.

That's what some economists are now saying.

Their fear: people now expect the Bank of Canada's next rate change to be a cut, so many will run right out and borrow money. That, in turn, will prolong both inflation and higher rates, they argue.

"In driving a further easing of financial conditions...I think the BoC has taken another micro step toward amplifying upside risk to housing, growth and inflation into 2024 and beyond," said Scotia economist Derek Holt.