Variable mortgage rates are having a moment

Every so often, the mortgage industry decides to hike rates in unison. This week was one of those times.

Most lenders bumped up multiple fixed rates , with fan favourites — three- and five-year fixed terms — climbing 10-plus basis points.

For this, one can blame Canada’s benchmark five-year bond yield and the factors behind it. It’s run up 50 basis points since early August and dragged fixed rates along for the ride.

Variable rates , meanwhile, are having a moment. Discounts have improved noticeably in recent weeks. And wouldn’t you know it, that always seems to happen right as markets start pricing in near-term Bank of Canada hikes.

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As we speak, you can find national lenders advertising prime — 0.90 per cent (3.55 per cent) or better.

Regional players (e.g., Ontario’s Ratebuzz.ca ) are undercutting that at prime minus one per cent (3.45 per cent). Hint: you might find some big banks and deep-discount brokers willing to do the same if you’re well-qualified and ask nicely, especially if you’re up for renewal.

These rates are 20-plus basis points better than what you could find just a few months ago. And if your mortgage is insured, you can lop off another 15 to 25 basis points.

With fixed and variable pricing moving in opposite directions, the gap between them is stretching like taffy. Based on the lowest nationally advertised insured and uninsured rates, this gap stands at roughly one percentage point today.

And despite all the rate-hike talk, roughly half of borrowers are still choosing variable rates. Their reasoning: