Rates are low and will stay low until 2023
The Bank of Canada (BoC) has announced it will hold its policy interest rate, at what it calls the effective lower bound. It will remain at just 0.25 percent, which is great news if you are thinking about buying a home. Interest rates have remained unchanged since March, and the BoC has now stated that until 2 percent inflation target is sustainably achieved rates will remain the same. In their current projection this does not occur until 2023.
It will take time for the economy to recover
The BoC will continue to provide monetary stimulus to support the economy through this recovery (BoC Governor Tiff Macklem). While the BoC left its policy rate untouched, it did announce changes to its Quantitative Easing program. These changes include purchasing bonds to maintain market liquidity, which helps keep mortgage rates low.
What will happen to Mortgage Rates?
The BoC’s announcement affects both fixed and variable rates. Fixed Rates are expected to remain low. Due to the BoC’s renewed commitment to purchasing longer-term bonds, fixed rates are likely to fall farther. This will help keep rates low for the 5-year fixed term.
Existing Variable Rate holders can take stock knowing interest rates will not rise, with the news that the BoC is maintaining its overnight rate at 0.25 percent until 2023.
New variable rate mortgage holders are not likely to see their rates fall further, as the BoC is very reluctant to consider negative rates. Although, an additional rate cut cannot be completely ruled out.
How can we help you?
During these uncertain times it is important to work with a Mortgage Broker who has invaluable mortgage industry knowledge. At Client First Mortgage Solutions we believe the client comes first. By setting timelines and maintaining a communication stream with you, we alleviate your mortgage financing fears. If you are thinking about buying a home Contact us today!
Original Article – Canadian Mortgage Trends