Are the days of the record breaking low five-year fixed rate coming to an end?
With the positive news from Pfizer and Moderna about their COVID-19 vaccines, we will hopefully begin to see that the end of the pandemic is getting closer.
The Canadian five -year government yields, which have been low due to the pandemic, determine the movement of fixed rate mortgages. The news of a vaccine becoming available next year has increased bond yields and will continue to do so in the future.
What will happen to my mortgage payments?
This does not mean that your mortgage payments will greatly increase, however it does mean that better deals are probably not on the horizon.
Being conscious of your household budget is also recommended before taking on a new mortgage or locking in a mortgage. We can help you Learn Before You Leap. The worst mistake you can make as a new homeowner or a homeowner locking into a new mortgage product is to overextend yourself financially. We can answer all your questions and help you make the best decisions that work for you. Contact Us today!
Rates will stay low for the next few years
CEO Justin Thouin believes that rates will stay low for the next few years with a gradual move to increase. There is still a lot of uncertainty around the pandemic, the economy, and the job market. It will take time for the bond yields to get back to the pre- pandemic 1.5-1.6 per cent of January 2020 (CEO of LowestRates.ca Justin Thouin).
CIBC Senior economist Avery Shenfeld anticipates The Bank of Canada to keep rates low at this time.
What will happen to Canada’s Real Estate Market?
Canada’s real estate market has been going strong throughout the pandemic. Higher interest rates typically slow things down, however we are not there yet. Bond yields have increased on the news of the vaccines but have settled on the viewpoint that first the global economy will need to get through the winter. Vaccine developments will eventually push bond yield higher by reinforcing and sustaining the recovery (Doug Porter BMO senior economist).
What mortgage is right for me?
Fixed Rate Mortgages or Variable Rate Mortgages is a question on a lot peoples minds. With many reductions made to the overnight rate by the Bank of Canada, variable mortgage rates are at an all time low. If you are wondering which mortgage product is better for you Contact Us today! We will make these decisions easy for you.
Original Article – Yahoo Finance Canada