With fixed rates below variable ones, mortgage market is in the Upside Down!

Call it the Stranger Things of the housing market: Canadians can now get a lower interest rate on a new mortgage by locking into a fixed rate, rather than opting for a variable rate.

That’s not how things usually work.

“People are used to paying extra for the ‘insurance’ of a five-year fixed rate,” Robert McLister, a Toronto mortgage broker and founder of RateSpy, said via email.

When it comes to financing available to well-qualified borrowers, five-year fixed rates haven’t been this cheap compared to variable rates in decades. The last time the mortgage market pulled off something similar was right before the 1990s recession, according to historical data compiled by McLister.

“We’re in rare territory,” he wrote in a recent blog post.

Here’s what to make of it.

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